Nigeria’s growth figures fail to lift equities market as bourse index sinks further

Nigeria’s equities market sustained its bearish trend Tuesday as the release of growth figures by the country’s National Bureau of Statistics (NBS) failed to lift market after a week of bearish trading.

Despite the positive growth figures, the Nigerian equities market recorded a decline for the 5th consecutive trading session as the all-share index contracted 0.3 percent to close at 35,403.92 points, while year-to-date (YTD) return tapered to 31.7 percent.

Negative sentiment towards WAPCO (-5.0%), GUARANTY (-0.5%) and UBA (-1.0%) dragged market performance. Accordingly, investors lost N34.7 billion as market capitalization settled at N12.2 trillion. Activity level was mixed as volume traded slid 13.7 percent to 230.0 million units while value traded improved 18.3 percent to settle at N4.8 billion.

Performance across sectors was largely bearish as all indices closed in the red save for the insurance index, which gained 0.1 percent owing to an uptick in NEM (+5.0%).

The oil & gas index depreciated the most, down 3.0 percent due to a decline in SEPLAT (-5.0%) and TOTAL (-4.9%), while the industrial goods index followed, shedding 2.1 percent on account of losses in WAPCO (-5.0%).

Likewise, the consumer goods and banking indices dipped 0.3 percent and 0.1 percent as a result of sell pressures on CADBURY (-5.0%) and GUARANTY (-0.5%) respectively.

GUINNESS (+5.0%) published a better than expected FY:2017 report today which showed gross earnings expanded to N125.9 billion year-on-year while profit after tax (PAT) expanded year-on-year to N1.9 billion from a loss of N2.0 billion in FY:2016. The company also proposed an interim dividend of N0.65 translating into a dividend yield of 0.8%.

Market breadth declined to 0.9x (from 1.3x recorded on Thursday) as 21 stocks advanced against 24, which declined. The best performing stocks were CILEASING (+5.0%), NEM (+5.0%) and GUINNESS (+5.0%), while SEPLAT (-5.0%), JBERGER (-5.0 %) and WAPCO (-5.0%) were the worst performers.

Analysts at Afrinvest are of the view that Tuesday’s performance was dragged by sustained sell sentiment in value stocks, believing that the downtrend will persist beyond the short term as positive developments in macroeconomic fundamentals are expected to bolster investors’ appetite for equities.

Nigeria’s statistical agency released its Q2:2017 GDP report today, which showed the economy grew by 0.55 percent year-on-year, much in line with general expectations.
The growth was largely driven by improvement in the oil sector and non-oil sector which grew by 1.6 percent and 0.5 percent year-on-year respectively in Q2:2017.