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Liquidity inflow to enhance market value ...As Guinness, Nestle Nigeria top gainers' table
Re-appearance of liquidity
WITH the appearance of liquidity in the stock market channelled towards purchasing of stocks, and following the recent plausible finances of banks, coupled with the new management in place at the Nigerian Stock Exchange (NSE), capital appreciation in stocks value will definitely be enhanced.
This new lease of life, despite the massive profit taking which characterises activities in the last two months, will do both local and institutional investors (foreign investors) a lot of good as the value of their investment in the market will rise again.
Investors, especially those outside the shores of the country, according to findings, are beginning to take position on virtually all the listed stocks, but with much emphasis through their brokers on banks stocks.
Further findings revealed that the investors are of the belief that with the banks coming up with a sound bottom line devoid of non-performing loans, they are bound to return to more profitability even as their stocks is set to chalk up in value.
Like what permutation was prior to andafter the end of the first quarter of the year, the market is likely to experience some tincture of rebound,as the market is not expected to suffer great depreciation again.
However, the stability of the market will, no doubt, in due course experience some hiccoughs as some investors may want to catch in on the rise in the prices of shares in the market.
Market experts had reasoned that while the liquidity inflow in the stock market lasted and coupled with the determination of the new Chief Executive Officer of the NSE to make transparency and sound corporate governance his watchword, investors' confidence in the market would continue to grow.
Liquidity squeeze in the market before now had been a major headache for both operators and regulators who felt they had done all that was needful to bring back fund into the market, but reverse has been the case. The resultant effect was the glut of shares in the market with no buyers.
Another contributory factor to the dip then in transaction in the market was that investors continued to take profit for both personal demands and to meet other obligations that required funds.
But with institutional investors, most of which are from outside the shore of the country, and whose injection of fund into the market in recent time, beginning from the first quarter of the year, the market is expected to appreciate in value.
Market observers believe that with the anticipation of listing new companies due to the upbeat of transaction in the equities market, and respect for the rule of law that should form the fulcrum on which the market must thrive, the market will continue to go northward.
Bank shares taking the lead
Listed banks on the NSE appear to be crawling out of the red-zone as their performance indices are beginning to turn green again.
An x-ray of the banking sub-sector in recent time revealed that with others trailing, the likes of Zenith Bank, Guaranty Trust Bank, FCMB and Access Bank have shut into the lead, showing emerging high earning of banks in their 2010 financial year results.
Available statistics in the industry at the end of the first quarter of the year showed that Zenith Bank Plc had since posted a profit after tax of N37.4 billion in its finances of December 2010 compared to N20.6 billion in 2009, thus representing a 44 per cent rise.
The bank is paying a cash dividend of 85 kobo just as its turnover closed the year under review at N192.48 billion as against N277.3 in 2009.
Similarly, Guaranty Trust Bank recorded a turnover of N153.9 billion in its financial result ended December 2010 as against N162.6 billion in 2009 even as its profit after tax rose to N38.3 billion from N23.68 in 2009.
The bank is proposing a cash dividend payment of 75 kobo and bonus issue of 1 for 4
Access Bank Plc also posted a profit after tax of N11.1 billion in its December 2010 financial end, thus representing a 60 per cent appreciation over the N4.40 billion loss in 2009.
The bank is also proposing a dividend cash payment of 30 kobo even as its turnover in the year under consideration rose to N91.142 billion compared to N84.98 billion in 2009.
An analyst with Vetiva Capital Market, Mr. Soji Solanke, had, during the banks' third quarter result last year, attributed the uptrend in the result of banks to the CBN reforms. According to him, “confidence is returning to the banking industry following the reforms.”
It will be recalled that in recent times, bank stocks are beginning to attract investors' interest once more as huge transaction is recorded in the sub-sector on week to week basis in the last one month.
Specific trading in some banks/others
The NSE All-Share Index closed at 25,036.75 last week.
Activities in the banking industry were on the uptick last week in spite of the release of some full year numbers that failed to impress many participants. Diamond Bank rallied towards the end of the week, with an 11.0 per cent gain. This was followed by Zenith Bank, FCMB, Intercontinental Bank and Stanbic IBTC, with gains ranging from 5.0 per cent to 7.0 per cent each. On the flip side, Oceanic Bank, Wema Bank, Bank PHB and Spring Bank shed points in excess of 3.0 per cent apiece. First Bank also shed marginal points at the end of the week; this may be the after-effect of its full year results which fell below participants' expectations.
In the breweries sector, all traded stocks, with the exception of Champion Breweries, recorded varied gains at the close of the week. NB and International Breweries gathered gains of 4.3 per cent respectively, while institutional purchases strengthened the price of Guinness with a 7.3 per cent gain.
Fringe players, C & I Leasing and Japaul Oil moved in the same direction with the market index, recording gains of 1.6 per cent respectively to close the week on a positive note.
Transaction in equities
Transactions on the floor of Nigerian Stock Exchange on Monday began on a lull note as both market indicators moved southwards causing both performance indices to drop by 0.2 per cent.
Analysts attributed the downward trend to the ongoing general elections in the country.
The market capitaslisation of equities depreciated by N19 billion to close at N7.883 trillion while the All-Share index equally shed 57.63 basis points or 0.2 per cent to close at 24,675.75 index points as against 24,733.38 as its opening index. Consequently, 25 stocks recorded price appreciation as against 26 others which shed value. Afribank led the gainers' chart with a gain of 5 per cent to close at N1.89. UPL followed with a gain of 4.95 to close at N5.09 while Transcorp added 4.83 Per cent to close at N1.52.
Cement Company of Northern Nigeria (CCNN) depreciated by 4.92 per cent to close at N10.25 to lead the pack of losers. Cadbury Nigeria followed with a loss of 4.90 per cent to close at N19.97 while Custodian Insurance dropped by 4.84 per cent to close at N2.95 among other losers'.
In all, investors staked a turnover of 209.6 million shares valued at N1.6 billion in 5,123 transactions.
However, transactions on the floor of NSE on Tuesday closed on positive note as both market indicators rose marginally by 0.02 per cent.
Consequently, the market capitalisation of equities appreciated by N2 billion or 0.02 per cent to cl at 7.885 trillion while the All-share Index equally rose by 0.02 per cent or 6.240 to close at 24.681.99.
Further analysis showed that 31 stocks recorded price appreciation while 26 others shed value.
May and Baker and Air service topped the gainers' chart with 5.00 per cent to close at N4.20 and N1.89 respectively.
International Breweries added 4.86 per cent to close at N6.47; First Aluminum gained 4.84 per cent to close at N0.65, Union Bank of Nigerian rose by 4.68 per cent to close at N3.13 while Transcorp added 4.61 per cent to close at N1.98 per share.