" />
Published On: Tue, Nov 28th, 2017

FBN leads the bulls in 2017

…Stanbic IBTC, Flour Mills show strength

By OKEY ONYENWEAKU

Equity investors are showing signs of increasing optimism as the year comes slowly to a close.

The Nigerian Stock Exchange’s All Share Index (ASI) ended last week at a staggering year to date yield of 39 per cent which compares favourably with South Africa’s Johannesburg Exchange’s (JSE’s) year to date yield of 19.1 percent and Hong Kong- Hang Seng’s yield of 35.8 percent and London’s FTSE 250 yield of 10.3 percent.

Even though many investors are still observing the market from far, a few whose investments are there are optimistic. There is almost a certainty that the market will close in the positive at year end. This assertion is reflected in the market indicators which reveal that the equity benchmarks, the All share index and market capitalisation have gained about 38 per cent and 39 percent respectively year to date.

The nightmare of 2008 and 2009, and even 2016 when value of stocks were almost completely eroded is gradually being forgotten as stakeholders are more determined to face the future.

Analysts have recognized that some companies in the capital market which have provided a basis for investors to feel a sense of achievement in their investment choice appear bullish. These include UACN Plc, Guinness Nigeria Plc, Nigerian Breweries Plc, Nestle Nigeria Plc, GT Bank Plc. Others are Zenith Bank Plc, First Bank of Nigeria Plc, Dangote Cement Plc, UBA and Cadbury Nigeria Plc. BH research reveals that their stocks have outperformed the market this year to date.

For instance, Stanbic IBTC Holdings has gained 170 .8 per cent from January to November 2017. FBN Holdings stock appreciated 102.9 per cent from N3.40 per share early in the year to N6.90. Flourmills Nigeria has also advanced by 93.83 per cent, G T Bank has gained 77.08 per cent, while Access Bank is up 68.8 per cent and Zenith bank stock has garnered 66.3 per cent.

Similarly, Glazo Smithkline has chalked up 60.3 per cent. Nestle Nigeria Plc has appreciated by 54.6 per cent, while UBA 53.54 per cent and PZ Cussons 40.68 per cent. Others which have per formed well but not better than the market include Dangote Cement 32.19 per cent, Seplat Petroleum 30 per cent, Lafarge Cement 22.1 per cent, Guinness Nigeria 21.61 per cent, Cadbury Nigeria 20.44 per cent. Other lesser performers are ETI 19.2 per cent, UACN 12.36 per cent, Union Bank 11.2 per cent and CAP Plc 6.25 per cent.

READ  Female suicide bombers attack Konduga in Borno

These stocks, experts reckon, are stocks in well-known and highly respected publicly- traded companies. They believe that blue chip companies are usually financially sound and are thought to be relatively low-risk investments. They tend to be less volatile than other companies and provide solid growth to portfolios.

The attraction emanates from their formidable stance in terms of share price even in bad times. Investors have always loved to bet on such stocks that display good fundamentals in the market place. Besides, most of them have been the highest valued stocks given the high prices. Investors have reaped good returns from some of these companies. And a few of them have, also paid higher dividend over the years.

The recent bullish market, analysts have attributed to the seemingly positive changes in the economy.

The economy is emerging stronger given the latest figures from the Nigerian Bureau of Statistics (NBS) that Nigeria’s Gross Domestic Product (GDP) has grown by 1.4 per cent, a sign that economic activities may be picking up after a deep recession through 2016. The price of crude has been relatively stable, hovering between $60 per barrel and above. The volume of production has also been stable given the relative peace in the Niger Delta. In fact, it is speculated that Nigeria pumps about 2 million barrels per day presently.

There has also been some reprieve from the creative handling of Forex by the Central Bank of Nigeria (CBN) which introduced the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology (NAFEX). The CBN created the new window to boost liquidity in the foreign exchange market and ensure timely execution and settlement for eligible transactions.

This window appears to have attracted more portfolio investors into the market. Those who had, hitherto pulled out of the financial market during the recession in 2016 seem to be returning in droves. These have helped in no small way to create some level of confidence in the Nigerian economy despite recent low ratings by Moodys.

Factually too, the National Bureau of Statistics (NBS) revealed that the value of capital imported into Nigeria in the second quarter of 2017 rose by $884.1 million to stand at $1.79 billion, representing 95.02 per cent increase.

According to NBS, Portfolio investments increased by 128.4 per cent, from the $337.3 million recorded in second quarter of 2016. And Portfolio investment was the largest component of imported capital in the second quarter of 2017, put at $770.5 million, or 43.0 per cent of the total.

‘’The game changer is the economic recovery from stagflation. Then the forex window NAFEX which the CBN created has precipitated the recovery of the market’’, said the Managing Director/CEO of highcap Securities limited, Mr. David Adonri.

READ  Facebook faces $125m fine, loses privacy case in Belgium

However, the CBN governor, Mr. Godwin Emefiele has always called for caution in celebrating the economic recovery, believing that it is still fragile.

When this is juxtaposed with the MPR at 14 per cent and Cash Reserves Ratio at 22.5 per cent, liquidity Ratio at 30 per cent, there are palpable fears that the bullish trend may not be sustainable.

Others have fingered inflation rate though being tamed at 15.9 percent have reduced significantly the volume of money in the hands of not only the investors, but also the amount of funds that banks can trade with and high unemployment are still threats to the bullish market.

Whereas, it is difficult to predict with accuracy the capital market, analysts can make projections based on macro and micro economic environment of any country which is not convincingly in favour of Nigeria now.

Never the less, many investors still remember with nostalgia when the market capitalization peaked at about 13.1trillion and the All-share Index gained a giddy height of 66,551.84 basis points on March 5, 2008. Most of the equities grew bullish and the Nigerian Capital Market was thrown into frenzy.

The market became the toast of the Nigerian Business community, with traders, civil servants, farmers and even students making equity investments.

Many analysts noted that the Nigerian Stock Exchange (NSE) was a beehive of activities with both investors and speculators scrambling to make a kill. Some individual stocks recorded over 100% appreciation while others edged up by 50% and above. However, market stakeholders have always said that period was abnormal and may never return.

Findings by BH reveal that though the market is relatively strong in a weak economy, it is difficult to predict with any amount of certainty its future. However, the market over the years had gained 65% in 2003;18.5% in 2004;1.01% in 2005;37.80% in 2006;74.73% in 2007; and lost -45.77% in 2008. It also lost -33.80% in 2009 and took a rebound to gain 18.50% in 2010.The market slipped back in the negative by -17% in 2011, gained – 35.4% in 2012, gained 47.19% in 2013, lost by -16.14% and close in the negative by about -17.3% in 2015 just as market closed at -6 per cent negative in 2016.

 

 

 

 

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Most Shared

Recent posts

  • It would be utterly irrational for Nigerians to vote for Buhari again- Junaid Mohammed

    Second Republic lawmaker, Dr Junaid Mohammed has noted that President Muhammadu Buhari has performed poorly in office and it would be irrational for Nigerians to vote for him in 2019. Dr Mohammed who made the assertion in an interview with Vanguard on Saturday, also criticized Buhari for being a poor reader who according to him, […]

  • Bayelsa tour: Obasanjo lays foundation for refinery

    Former President Olusegun Obasanjo continued his visit to Bayelsa State after inaugurating some projects of the state government on Friday. The former president continued his tour of the state on Saturday with the laying of the foundation for the establishment of Azikel Refinery. The refinery is owned by Dr Eruani Godbless, a prominent businessman and […]

  • Quite notice, hate speeches and President Buhari’s Northenisation/Islamisation agenda by Professor Ben Nwabueze

    Quite notice, hate speeches and President Buhari’s Northenisation/Islamisation agenda by Professor Ben Nwabueze NATURE OF HATE SPEECHES In the aftermath of the divisions in the country caused by President Buhari’s Northernisation/Islamisation Agenda, as manifested in his lopsided strategic appointments that unfairly favour the North as against the South, and the complete exclusion of the South-East […]

  • Chief Adeniyi to Tinubu: Withdraw your support for Buhari or risk losing influence in Yoruba land

    OBINNA EZUGWU Veteran columnist and elder statesman, Chief Adetola Adeniyi has warned former Lagos governor, Senator Bola Ahmed Tinubu against supporting President Muhammadu Buhari’s second term bid, as according to him, such could mark the beginning of the end of his influence in Yoruba land. Chief Adeniyi who led the Global Intelligentsia for Buhari, a […]

  • Killings: Buhari condemns action, sends Defence Minister to Zamfara

    President Muhammadu Buhari has strongly condemned Thursday’s massacre of innocent persons in Birane village, Zurmi Local Government Area of Zamfara State. The President stated this in a statement issued on Friday by his Senior Special Assistant on Media and Publicity, Mr Garba Shehu, following the death of at least 18 persons as a result of […]

  • Obasanjo visits Jonathan at Bayelsa residence

    Former President Olusegun Obasanjo on Friday visited former President Goodluck Jonathan at his home in Bayelsa State. Dr Jonathan welcomed the elder statesman who was in his home for a private dinner, in company with his wife, Patience. Earlier before the visit, former President Obasanjo inaugurated a government specialist hospital in the state and unveiled […]

  • NNPC dispatches 29.058m litres of PMS to 13 states

    The Nigerian National Petroleum Corporation (NNPC) said it supplied a total of 29.058 million litres of Premium Motor Spirit (PMS) popularly known as petrol to thirteen Northern states in three days. In its report on daily dispatch to filling stations made available to the News Agency of Nigeria (NAN) in Abuja on Friday, it named […]

  • Lagos will bring about world class childhood disability intervention-Joyce Onofowokan

    An area in which different levels of governments in Nigeria have remained loudly silent and painfully indifferent is childhood disability. Children with disabilities and their parents have over the years ridden on waves of disillusion, despair, and decay. They constitute a tribe of the silent minority that the society has conveniently allowed to disappear into […]

  • Ports now more efficient with FG’s reform – Izuwah

    The Infrastructure Concession Regulatory Commission (ICRC) has said that Nigerian ports were now witnessing more efficiency following the reforms of the Fedearl Government. Mr Chidi Izuwah, Acting Director-General of the commission said this during an inspection tour of facilities of the Nigeria Port Authority (NPA) in Rivers state. The acting DG said that the policy […]

  • Power: Nigeria gets $486m W/Bank credit

    World Bank has approved a 486 million dollars credit facility to Nigeria for electricity grid improvements, the lender said on Friday. “The investments under the Nigeria Electricity Transmission Project will increase the power transfer capacity of the transmission network and enable distribution companies to supply consumers with additional power,” the World Bank said. Nigeria’s  power […]

  • Army places N3m bounty on Boko Haram leader

    The Nigerian Army has announced a cash reward of N3million for information on Boko Haram leader Abubakar Shekau. “The Nigerian Army will give out Three Million Naira (N3,000,000.00) cash reward for any credible information that leads to the arrest of Abubakar Shekau, the fugitive factional Boko Haram terrorists’ group leader,” a statement by the Director, […]

  • Ethiopian Prime Minister Desalegn resigns

    Hailemariam Desalegn, A day after President Jacob Zuma resigned as South African President, Ethio­pian Prime Minister, Hailemariam Desalegn, Thursday announced his resignation in a televised broadcast amid political turmoil in Africa’s fastest-growing economy. The announcement came just after the government released hundreds of political prisoners, including some of the most prominent opposition members in the country, […]

  • FRSC officials donate blood to accident victims in Osun

    The Federal Road Safety Commission (FRSC), Officers, Ilesa Unit, has donated blood to improve health delivery schemes as well as to save accident victims. Speaking at the occasion, Mr Samuel Oyedeji, the Ilesa Unit Commander Federal Road Safety Commission (FRSC) said on Wednesday, that the blood donation programme was organised to mark 30th Anniversary of […]

  • Zuma’s exit ushers in new South African President

    South Africa prepared to welcome wealthy former businessman Cyril Ramaphosa as its new president Thursday after scandal-tainted Jacob Zuma resigned under intense pressure from his own party. Zuma announced he had stepped down in a late-night television address in which he took some digs at the African National Congress (ANC) party that had threatened to […]

  • Zuma resigns

    Jacob Zuma has finally bowed to pressure and stepped down from office as South African President The embattled president made the announcement in a broadcast to the nation on Wednesday evening, noting that he has stepped down “with immediate effect.” Zuma has been under pressure to step aside following allegations of corruption. On Tuesday, he […]

  • DPR fines oil marketer N1.2bn for petrol diversion

    The Department of Petroleum Resources (DPR), said it fined one oil marketing company, A.Y. Maikifi, based in Kano, the sum of N1.2 billion for diverting 115 truckloads of the products Mr. Mohammed Saidu, Head, Public Affairs Unit, DPR Abuja Zone, disclosed this in Abuja, on Wednesday while addressing newsmen. He said that about 162 truckloads […]