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The Monthly NCM Report for Nov 2011



ISSN 1597 - 8842 Vol. 1 No. 84 / December 07, 2011

Executive Summary 

The bears returned to the bourse in the month of November 2011 to erase the gains recorded in the previous month as pessimistic trading dominated market atmosphere throughout the period under review.

Nigerian stocks shed above 800 basis points in the month, amounting to N317.27 billion loss against the N130.07billion gain experienced in the previous month.

This showcased the wary posture of the investors towards the investment in equities in the month in the face of low valuation and prices of the equities which could be partly traced to lack of positive news to abate the negative sentiments while the sustained attractive rates in the risk-free investments continued to lure funds out of the market unabatedly.

The outlook recorded in the month is not too far from our expectation as we had envisaged an increased volatility in the outstanding months despite the impressive gains recorded in the previous month.

The festive period and end of the year syndrome would continue to have depressing impact on the market as sell mandates are expected to increase considerably, just as we have seen in the month under review.

A cursory look at the trend revealed the dominance of the bears in the early stage of the month as the market could not sustain the five days bargain momentum observed towards end of the previous month. As a result, market net worth depleted by N200.97billion in first 10days (November 1st to November 16th 2011) of the month while ASI experienced -2.23% dip as year to date market performance stood at -18.84%.

During this period, the food & beverages stocks were the worst hit as NSE sectoral indices revealed -9.63% loss while Oil & Gas stocks were the best performing with 2.20% gain as revealed by sectoral indices.

In the same vein, bearish sentiments still dominated market atmosphere with growing investors’ apathy in the last 10days of the month as buttressed by -12.88% decline in market turnover when compared with early stage posture.

An average of 238.45million volume turnover recorded against average turnover of 273.70million units traded in the first 10days of the month.

During these sessions, banking stocks were the major hits with -5.17% loss due to the increased volatility witnessed in the sub-sector, followed by insurance with -3.95% loss while Oil & Gas sub-sector sustained the leading performance experienced in the early stage of the month to record modest gain of +.53%.

Market however, dipped by -1.75% between the period of 17th and 30th November 2011 while the month closed with aggregate loss of -4.00% to erase the 1.72% gain recorded in the previous. The outlook also revealed worse market performance when compared with -1.34% loss recorded in the previous year comparable period.

An extended analysis revealed a low turnover in the month, buttressing the wary posture and low appetite of the investors as market turnover closed lower by -31.11% when juxtaposed with previous year posture.

More so, at end of the month, the year to date performance remained unimpressive at -20.31%, a true reflection of sustained weak market fundamentals as observed in the early stage of the year. The month appeared worst performing so far in the quarter.

The looming dark cloud in the other markets across the globe could impact the trend as fear of second global recession triggered huge migration of funds to save haven in the month unabatedly.

On the other hand, the efforts on the part of the management of NSE to put market back on recovery path is commendable, though we want to resound that improved market fundamentals would be a key driver.

In addition, the concerted bid by the stakeholders to encourage the telecomm firms and other multi-nationals to list on the Nigerian bourse is a welcome idea- a right step into right direction.

In our opinion, this will not only grow the market capitalisation and net worth considerably but it will help revitalise the primary market and in a way renew market confidence as well, all things being equal.

We believe series of listings and regulatory incentives would be the major catalyst in driving this to save harbour.

On the final note, the merger and acquisition in the market, Oceanic Bank limited and Ecobank Plc combined business, living Ecobank the surviving entity. More so, ETI, the parent body of Ecobank Plc, increased its stake in Ecobank Plc. As a result, this technically affects the listing status of the Ecobank Plc as the bank fell short of the required floats in the market- this might result to delisting of the entity (Ecobank Nigeria Plc) from Nigerian bourse.

A number of developments we believed should have impact in the month as predicted in the past monthly reports. Some of which are:


Developments in the coming months:

  • Continued sell mandates due to festive period
  • Closing of books by institutional investors
  • Positive response to concluded agreement to grant debt leniency to brokers and dealers as announced by finance minister.
  • Reactions to stakeholders bid to require listings of telecom and multinationals firms
  • Dematerialization of shares
  • Inflation and Monetary Policy rates
  • Liquidity challenges
  • Improved regulatory oversight

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