Archives October 2016

Caverton, Wema Bank, NEM lead N21bn market loss

The equities market, on Tuesday, recorded a loss of N21bn led by Caverton Offshore Support Group Plc, Wema Bank Plc, NEM Insurance Company Nigeria Plc, ETranzact International Plc and United Bank for Africa Plc.

Market breadth remained negative with 10 advances and 19 declines.

The Nigerian Stock Exchange market capitalisation closed at N9.712tn from N9.733tn on Monday, while the NSE All-Share Index dropped to 28,277.93 basis points from 28,335.40 recorded on Friday last week.

A total of 198.104 million shares valued at N1.317bn exchanged hands in 2,806 deals.

The highest index point attained in the course of trading was 28,335.40 basis points, while the lowest and average index points stood at 28,236.23 and 28,269.20 basis points, respectively.

Coming from a one-session break amid national holiday, the Nigerian stock market kicked off the fourth quarter of 2016 on a slightly negative note, down 18 basis points following mixed closes across weighty sectors.

Having led market advances in the previous session, the consumer goods sector swung to the negative due to 3.74 per cent and 2.77 per cent losses in the share prices of Flour Mills Nigeria Plc and Nigerian Breweries Plc, respectively.

The financial services sector reversed the previous position to gain 1.4 per cent due largely to a 4.12 per cent gain in the share price of Guaranty trust Bank Plc and 2.37 per cent gain in the shares price of Zenith Bank Plc.

The oil and gas sector stretched gains by 0.13 per cent as 1.3 per cent advances in Oando Plc outweighed 8.31 per cent losses in Conoil Plc. The industrials goods sector closed flat.

On what will shape the next trading session, analysts at Vetiva Capital Management Limited said, “We observe a handful of mid-to-large caps split across the bid and offer carts at the close of the session. This could yield further mixed performances across key sectors in the session ahead.”

On the global front, European markets advanced amidst turnaround in Germany’s Deutsche Bank (slumped to record low last Friday) and a rally across British exporters after updates on United Kingdom’s withdrawal from the European Union pulled the Pound to a three-decade low.

Source:© Copyright Punch Online

European stocks sharply lower on Deutsche Bank concerns; DAX down 1.77%

European stocks were sharply lower on Friday, as ongoing concerts over the European banking sector weighed and as investors remained cautious ahead of a report on euro zone inflation due later in the session.

During European morning trade, the EURO STOXX 50 plummeted 2.01 per cent, France’s CAC 40 tumbled 2.03 per cent, while Germany’s DAX 30 lost 1.77 per cent.

European equities were rattled by ongoing concerns over the health of Deutsche Bank (DE:DBKGn) following reports trading clients had withdrawn excess cash and positions held in the largest German lender due to recent sanctions Financial stocks were broadly lower, as French lenders BNP Paribas (PA:BNPP) and Societe Generale (PA:SOGN) plunged 3.38 per cent and 3.94 per cent, while Germany’s Deutsche Bank and Commerzbank (DE:CBKG) lost 0.40 and 4.38 per cent.

Commerzbank said on Thursday that it will be cutting thousands of jobs. Among peripheral lenders, Italy’s Intesa Sanpaolo (MI:ISP) and Unicredit (MI:CRDI) dove 3.44 per cent and 4.27 per cent respectively, while Spanish banks BBVA (MC:BBVA) and Banco Santander (MC:SAN) plummeted 3.97 per cent and 4.05 per cent.
Elsewhere, France’s AXA SA (PA:AXAF) lost 3.07 per cent and Germany’s Allianz (DE:ALVG) tumbled 1.58 per cent as the two companies continued talks regarding a deal with Standard Chartered (LON:STAN) that would allow the insurance firms to sell their products through the bank’s Asian branches.

Telefonica (MC:TEF) added to losses, as shares plunged 4.29 per cent after saying it had cancelled the planned listing of its Telxius business due to weak investor demand. In London, FTSE 100 lost 1.19 per cent, as U.K. lenders tracked their European counterparts sharply lower.

Shares in HSBC Holdings (LON:HSBA) tumbled 1.59 per cent and Lloyds Banking (LON:LLOY) plummeted 2.32 per cent, while the Royal Bank of Scotland (LON:RBS) and Barclays (LON:BARC) sank 3.08 per cent and 3.36 per cent respectively.

In the mining sector, stocks were mixed on the commodity-heavy index. Rio Tinto (LON:RIO) declined 1.77 per cent and Glencore (LON:GLEN) plunged 2.59 per cent, while rivals Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) gained 0.82 per cent and 1.05 per cent respectively.

Meanwhile, Burberry Group PLC (LON:BRBY) rose 0.22 per cent after analysts at RBC raised their price target on the stock. In the U.S., equity markets pointed to a lower open.

The Dow Jones Industrial Average futures pointed to a 0.44 per cent decline, S&P 500 futures showed a 0.44 per cent loss, while the Nasdaq 100 futures indicated a 0.45 per cent drop.

Source:© Copyright Guardian Online

Asian stocks slip as Deutsche sours mood, oil gains on OPEC pact

Asian stocks followed Wall Street lower in early trade on Friday, while oil prices held close to the highest level in almost a month on optimism over an OPEC plan to curb output.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, on track for a 0.4 percent drop for the week. It is poised for a 2.2 percent gain in September, and a 9.5 per cent jump in the third quarter.

Japan’s Nikkei retreated 1.5 percent after sluggish consumption data. It is down 1.7 percent for the month, but set to end the quarter 5.7 percent higher.

Some Bank of Japan board members doubted whether the central bank’s overhaul of its massive stimulus programme, announced last week would enhance flexibility of monetary policy, a summary of opinions at the central bank’s September rate review showed on Friday.
Japanese consumer prices in August fell 0.5 percent from a year earlier, missing expectations. Consumer prices in the Tokyo area in September dropped 0.5 percent, the fastest year-on-year drop since 2013. Japanese industrial output rose 1.5 percent, beating expectations for a 0.5 percent rise.

South Korea’s KOSPI slipped 0.8 percent after manufacturing activity contracted for a second month in September to hit a 14-month low, and August industrial output posted the biggest decline in 19 months. On Thursday, Wall Street lost about one percent as Deutsche Bank shares slumped to a record low after a report that trading clients had withdrawn excess cash and positions held in the largest German lender.

The bank’s US shares closed down 6.7 percent at USD11.48 after earlier falling to as low as USD11.185. The immediate cause of Deutsche’s crisis is a fine, disputed by Deutsche, of up to USD14 billion by the U.S. Department of Justice over its sale of mortgage-backed securities.

Deutsche’s woes, alongside a grilling of Wells Fargo’s chief executive by U.S. lawmakers amid a call for the bank to be broken down due to a scandal over its opening of client accounts without agreement, helped push the S&P bank index down 1.6 percent.

Oil prices extended gains, rising more than 1 percent on Thursday, on optimism over an agreement by OPEC to cut output, but the rally was limited by doubts the reduction would make a substantial dent in the global crude glut. US crude futures added 1.7 percent to USD 47.83, after climbing to as high as USD48.32, the highest level in almost five weeks. They were little changed on Friday.

Brent crude rose 1.1 percent to USD 49.24 on Thursday, after earlier touching a three-week high of USD49.24. The US dollar was little changed at 101.09 yen, heading for a flat end to the week, but down 2.2 percent for September, and 2 percent for the quarter.

While the yen is headed for its third straight quarter of gains, speculation that Japanese investors may buy more foreign assets in their new business half-year starting from Oct. 1 could stem the Japanese currency’s gains in the near term.

The euro was also steady at USD1.12165, on track for a 0.1 percent decline for the month, but up 1 percent for the quarter. The Indian rupee posted its biggest drop since June on Thursday, after Indian officials said elite troops crossed into Pakistan-ruled Kashmir and killed suspected militants preparing to infiltrate and carry out attacks on major cities, in a surprise raid that raised tensions between the nuclear-armed rivals.

Source:© Copyright Guardian Online

Banking stocks lose N5.2bn in one week

The value of banking (financial services) industry stocks crashed by N5.2bn last week.

At the end of last trading of the week on the floor of the Nigerian Stock Exchange on Friday, the financial services industry (measured by volume) had 970.503 million shares on the activity chart, valued at N4.540bn and traded in 8,298 deals; thus contributing 75.41 per cent and 48.80 per cent to the total equity turnover volume and value, respectively.

But, in the penultimate week, the financial services industry had 4.177 billion shares valued at N9.788bn traded in 9,805 deals; thus contributing 96.45 per cent and 58.25 per cent to the total equity turnover volume and value, respectively.

Last week, 1.287 billion shares worth N9.303bn in 15,258 deals were traded by investors on the floor of the Exchange in contrast to a total of 4.331 billion shares valued at N16.803bn that exchanged hands in 16,797 deals the penultimate week.

Last week, the agriculture industry followed in terms of volumes traded with 109.788 million shares worth N155.716m in 269 deals. The third place was occupied by the consumer goods industry with a turnover of 82.938 million shares worth N2.774bn in 2,884 deals.

Trading in the top-three equities namely: Continental Reinsurance Plc, FCMB Group Plc and Livestock Feeds Plc (measured by volume) accounted for 463.640 million shares worth N516.306m in 770 deals, contributing 36.03 per cent and 5.55 per cent to the total equity turnover volume and value, respectively.

Source:© Copyright Punch Online

Stocks rise on robust factory data

Emerging equities rose 0.8 per cent on Monday, buoyed by robust factory activity data in Europe and Asia, and reports that a fine imposed on Germany’s Deutsche Bank may be smaller than initially feared.

The benchmark emerging equity index rose off 10-day lows hit on Friday, tracking developed market gains after a report said Deutsche Bank and the United States Department of Justice were close to agreeing a settlement of $5.4bn, well below the initial $14bn demand, according to Reuters.

The threat of a fresh European banking crisis had pushed Deutsche Bank shares to record lows last week, dragging on European and emerging market sentiment.

Robust manufacturing activity data across emerging markets also lifted investor sentiment, with Hungary, Poland, China, Indonesia and Taiwan performing strongly.

“Overall this goes with our view that emerging markets are doing fairly well – the tide has to some extent turned,” said Jakob Christensen, head of emerging markets research at Danske Bank in Copenhagen.

Mainland China was closed for a week-long holiday but Hong Kong gained 1.2 per cent and Indonesia shares rose 1.7 per cent after export orders touched a four-year high.

Taiwan shares also rose 0.7 per cent after September factory activity hit a two-year high.

The strong Asian performance was echoed across emerging Europe, where Budapest shares rose 0.7 per cent after factory activity touched its highest September figure since 1995, although this survey tends to be volatile.

The forint weakened slightly against the euro, however, following a referendum on Sunday in which a majority rejected the European Union’s migrant quotas, although low turnout made the poll invalid.

Polish stocks rose 0.5 per cent, with factory activity expanding at the fastest pace in six months , while Russian dollar-denominated shares rose almost 1.2 per cent after Russian manufacturing was boosted by the sharpest rise in output in nearly two years.

“Clearly the fairly strong macro economic management, together with higher oil prices, is bringing some results (for Russia) and we are looking for positive growth possibly in Q4 and definitely in 2017,” said Christensen.

The Russian rouble firmed 0.8 per cent against the dollar, helped by a rise in oil prices of almost one percent to above $50 a barrel.

The Kazakh tenge also firmed 0.3 per cent before an interest rate review that could cut rates by 50 basis points to 12.5 per cent. The central bank has cut rates twice this year by 200 basis points each time.

South African telecoms stock MTN fell one percent and its 2024 Eurobond was down 0.9 cents to the lowest since end-June following a downgrade by Standard & Poor’s on Friday to BB+ from BBB-.

The company has denied allegations it illegally repatriated $13.92bn from Nigeria, its biggest market, where it also faces a fine in a dispute over unregistered SIM cards.

Overall South African shares slipped 0.2 per cent but the rand firmed 0.7 per cent against the dollar.

Turkish stocks rallied 1.2 per cent but the lira slipped 0.23 per cent after consumer and producer prices rose less than expected.

Tim Ash, an analyst at Nomura, said the data would help the central bank justify its rate-cutting stance and perhaps also lay the way for further easing.

“The (central bank) likely will continue cutting rates and selling this as ‘simplification’ until it unifies its main policy rates.”

Colombian dollar bonds fell around one cent across the curve after voters rejected a peace deal with Marxist FARC guerrillas, plunging the nation into uncertainty.

Source:© Copyright Punch Online

Analysts predict stable financial markets this week

Analysts in the country’s capital market foresee a stable equities and fixed income markets this week given last week’s market activities.

The Nigerian Stock Exchange All-Share Index would have closed lower last week but for the surge in Nigerian Breweries Plc’s stocks late in Friday’s session.

Analysts at Vetiva Capital Management Limited said, “We believe there could be a reversal after the Independence holiday on Monday even as market breath turned widely negative.”

On the fixed income market, they said considering the bearish close to the week amid tight system liquidity, “we anticipate a relatively tepid trading session after the Independence Day holiday.”

However, given the dearth of dollar supply amid high dollar demand, the analysts expect the naira to shed more weight across markets this week.

The Nigerian bourse traded sideways in the past week with the NSE ASI hovering round the flat-line for most part of last week following mixed performances across key sectors.

However, the NSE ASI closed 31 basis points higher on Friday, buoyed by advances in a number of bellwether stocks.

Overall, the ASI posted week-on-week gains of 0.31 per cent and year-to-date loss pared to 1.07 per cent.

The fixed income market traded mixed in the previous week amid consistent liquidity mop-up by the Central Bank of Nigeria. Overall, yields in the Treasury bills and bonds space advanced 167 basis points and 40 basis points, respectively.

At the parallel market, the naira dipped to new lows fuelled by dollar scarcity amid rising dollar demand.

To this end, analysts at Meristem Securities Limited said, “Last week resumed with profit taking activities on counters that rallied in the penultimate week. However, OPEC members’ decision on output freeze swayed market sentiment to the positive direction during the last trading days of last week. We anticipate this seesaw movement to persist in the absence of any market-moving information this week.”

For the agriculture stocks, the analysts said, “We attribute the sector’s performance to persistent profit taking activities on Presco Plc last week. In the coming week, we do not expect significant activities, considering the dearth of news inflow to drive momentous price changes.”

The depressed mood in the banking sector, they noted, was primarily due to profit taking activities on sector heavyweights.

“While we anticipate mixed investors’ sentiments this week, we expect the sector to record a moderate week-on-week gain, hinged on bargain hunting activities.”

For consumer goods stocks, while bargain hunting activities were sustained last week, the analysts observed some investors took profit on a couple of stocks that rallied in previous weeks.

“This week, we expect profit taking to prevail amid varied sentiments,” they added.

For healthcare sector stocks, they said, “As expected, healthcare stocks continued their seesaw trend last week, as certain stocks which recorded price appreciation earlier in that week witnessed some shedding towards the tail end of the week, and vice versa. Barring any significant news inflow, they expect the trend to be sustained till the quarter three 2016 results start streaming in.

The industrial goods sector’s performance was driven by a mix of bargain-hunting and profit-taking on the sector’s large cap stocks.

Considering the macroeconomic shift towards fostering inclusive growth in the country through increased capital expenditures, the Meristem analysts expect investors to consistently take positions on the sector counters as events unfold.

They expect insurance sector’s performance this week to be dictated by the general market mood, in the absence of any market moving news flow – although they see some possibilities of bargain hunting on some of the sector’s stocks this week.

For oil and gas stocks, they said, “The sector resumed last week on a negative note, on the back of profit taking on most counters that rallied in previous weeks. However the late news on OPEC’s proposed output freeze, swayed market directions to the positive wing on the last trading days of last week. We expect investors to continue to react to this news even this week.”

Source:© Copyright Punch Online