Investors lose N1.4trn as rising yields in FI takes toll on equities market

The Nigerian equities market, having recorded four consecutive weekly losses, ended the month of February bearish with the All Share Index (ASI) at -6.16 per cent as investors eye the continuous uptick of yields in the fixed income market.

In the month of February, investors lost N1.36 trillion as the market capitalisation of the local bourse closed the month at N20.824 trillion as against an opening of N22.187 trillion.

Again, the Nigerian Treasury Bills (NTB) auction results wherein stop rates rose by an average of 254 basis points to 3.67 per cent from 2.33 per cent at the last auction, thereby weighing on investors sentiment at the Nigerian Stock Exchange (NSE).

Analysts at Cordros Capital noted that as envisaged, the Treasury bills secondary market ended last week on a bullish note, following the system liquidity boost.

Basically, the average yield across all instruments declined by 21bps to 3.9 per cent. Across the curve, local demand for OMO instruments sustained the space’s bullish performance, as the average yield fell by 27bps to 6.1 per cent.

With the projection that yields would trend higher in the coming week, even as local investors sell instruments to meet funding obligations amidst the anticipated liquidity squeeze, there seems to be no respite for the equities market.

However, as the market awaits the filling of corporate earnings as more companies publish their audited Full Year 2020 results, as well as a declaration of dividends, sentiments might be swayed in the short term.

“However, we expect intermittent profit-taking activities to continue due to lingering concerns about yield elevation in the FI market. As a result, we think the local bourse will likely exhibit a zig-zag pattern. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings,” reports from Cordros Capital stated.

Last week, the All-Share Index of NSE fell below the 40,000 psychological mark, declining by 0.96 per cent Week-on-Week (WoW) to close at 39,799.89 basis points, just as it’s Month-to-Date(MTD) return stood at -6.16 per cent at the end of trading activities on Friday, February 26.

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Consequently, the Year-to-Date (YtD) return dipped further in the negative territory, settling at -1.2 per cent.

Notably, sell-offs in the stocks of Nigerian Breweries, Lafarge Africa, MTN Nigeria and Dangote Sugar drove the weekly loss as they depreciated by 11.9 per cent, 7.6 per cent, 3.3 per cent and 2.7 per cent respectively.

The sectoral performance was also broadly negative save for the Oil and Gas and Banking indices that posted gains by 1.0 per cent and 0.7 per cent respectively. The Insurance, Consumer Goods and Industrial Goods recorded losses by 4.9 per cent, 3.2 per cent and 0.5 per cent respectively.

However, activity levels were strong, as trading volumes and value rose by 25.3 per cent w/w and 13.3 per centw/w, respectively.

Specifically, a total turnover of 1.930 billion shares worth N20.656 billion in 24,687 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.541 billion shares valued at N18.235 billion that exchanged hands in 22,752 deals in the preceding week

The Financial Services Industry led the activity chart with 1.450 billion shares valued at N15.070 billion traded in 14,236 deals; thus contributing 75.11 per cent and 72.96 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 154.906 million shares worth N179.673 million in 798 deals. The third place was the Consumer Goods Industry, with a turnover of 111.782 million shares worth N2.270 billion in 3,865 deals.
Trading in the top three equities namely Wema Bank Plc, Zenith Bank Plc and First Bank Holding Plc accounted for 782.167 million shares worth N8.914 billion in 4,624 deals, contributing 40.52 per cent and 43.15 per cent to the total equity turnover volume and value respectively.








Investors lose N1.4trn as rising yields in FI takes toll on equities market

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