A Review of the Nigerian Energy Industry

Oil stocks rescue volatile equities market

Nigerian Stock Exchange 110 February 2014, Lagos – Oil stocks helped the Nigerian equities market to close 0.50 per cent higher in a week that was characterised by choppy trading

Banking stocks remained largely under heavy selling pressure as the investors reacted to  the implementation of the 75 per cent  cash reserve ratio(CRR) on public sector deposits in banks. The previous week the market had declined by 0.83 per cent as investors dumped  banking stocks on concerns over the profitability of banks as a result of the hike in CRR from 50 per cent to 75 per cent.

Some restive  investors continued the dumping of the banking stocks last week leading to a decline of  1.64 per cent in the   Nigerian Stock Exchange (NSE) Banking Index.

However, positive reactions to the impressive full year results of Forte Oil Plc and announcement by Oando Plc that it had met the financial obligations  under the ConocoPhillips Nigerian assets acquisition deal bolstered that sector by 7.3 per cent.

Stock Market Indicators
Although the market was in the bears’ territory for three days out of the five trading days last week, the NSE All-Share Index closed 0.50 per cent higher at 40,773.50. The market capitalisation also rose 0.50 per cent to close at N13.070 trillion.

Four of the NSE sector indices appreciated during the week led by the NSE Oil/Gas Index, which rose by 7.00 per cent to close at 323.45. The NSE Insurance rode on the back of 35 per cent gains by International Energy Insurance Plc to book a 1.3 per cent growth, closing at 151.44.  The NSE Lotus II  rose  0.93 per cent  to close at 2,889.44, while the NSE  30 inched up by 0.03 per cent to close at 1,846.15.

However, the NSE Consumer Goods index depreciated by 0.35 per cent to close  at 1,047.46. The NSE Banking Index edged lower by 1.64 per cent to be at  408.78, just as  the NSE Industrial Goods index sheds 0.38 per cent to close at 2,603.66. The NSE-ASeM closed flat.

Daily  Performance
Smarting from the loss of the previous week, the market resumed trading on Monday with a gain of 1.96 per cent in the ASI while investors traded 396.955 million shares valued at N5.449 billion in 5,446 deals. Whereas the positive performance was expected to maintained, he bears set in  on Tuesday with the ASI going down by 0.73 per cent.  In terms of volume of trading, it went up as investors exchange 407.789 million shares in 5,846 deals. But in value terms, it suffered a depreciation as investors committed N4.453 billion in those in stocks compared to N5.449 billion the previous day.

The third day of the week recorded the highest value of transactions, accounting for N7.286 billion invested in 251.668 million in 5,200 deals. However, the bears maintained their grip on the market as the ASI suffered a dip of 0.45 per cent.
The market recorded its third straight decline on Thursday as the ASI closed 0.28 per cent lower. Similarly, the value of shares traded on Thursday compared to the previous day fell significantly as investors staked N2.707 billion on 261.840 million shares in 4,700 deals.

Friday, which was the last day of the week witnessed a marginal a recovery of 0.02 per cent in the ASI while volume and value of shares traded equally rose compared to the previous day.

Market Turnover
In all, investors traded 1.591 billion shares worth N23.079 billion in 26,257 last week, compared with 2.221 billion shares valued at N21.045 billion that exchanged hands the previous week in 27,855 deals.

A further analysis of the trading showed that the  Financial Services Industryled the activity chart in volume terms.
The sector recorded  1.116 billion shares valued at N10.718 billion traded in 13,044 deals. With performance, the  sector thus contributed  70.13 per cent  and 46.44 per cent  to the total equity turnover volume and value respectively. The Conglomerates Industry followed with a turnover of 175.543 million shares worth N1.042 billion in 1,954 deals. The third place was occupied by the Oil and Gas Industry with 97.145 million shares worth N2.499 million in 3,441 deals.

Trading in the top three equities namely, Zenith Bank Nigeria Plc, Transnational Corporation of Nigeria Plc and Universal Insurance Plc (measured by volume) accounted for 495.494 million shares worth N4.997 billion in 3,159 deals, contributing 31.15 per cent and 21.65 per cent to the total equity turnover volume and value respectively

Also traded during the week were a total of 165 units of NewGold Exchange Traded Funds (ETFs) valued at N326,855 million executed in  three deals compared with a total of 545 units of NewGold valued at N1,080 million transacted last week in 2 deals.

Similarly, 1,090 units of FGN bonds valued at N1.212 million were last week traded in 11 deals compared with a total of 4,295 units of FGN bonds valued at N4.772 million transacted the preceding week.

Gainers and Losers
The price movement chart showed that  46 equities appreciated during the week under review higher than  15 equities that added value the previous week. Contrarily, 39 equities depreciated in prices lower than 64 equities of the preceding week, while 113 equities remained unchanged compared with 119 equities in the preceding week.

In absolute terms, Forte Oil Plc led the price gainers as investors reacted to the N4 dividend declared for the 2013 financial year. The stock rose N12.01 to close at N102.21 per share. Oando Plc followed with a gain of N2.67 to close at N21.83 per share. Beta Glass Plc gained N1.80 to close at N19.47. Berger Paints Nigeria Plc chalked up N0.87 to close at 9.92, while Neimeth International Pharmaceutical Plc garnered N0.81 to close at N2.38 per share.

Others among the top 10 price gainers included: Honeywell Flour Mills Plc and Cutix Plc (N0.27 each); International Energy Insurance Plc (N0.21); Great Nigerian Insurance Plc (N0.190) and Japaul Oil and Maritime Services Plc (N0.05).

Conversely, Lafarge Cement WAPCO Nigeria Plc led the price losers with N6.00 to close at N108 per share. Eterna Plc trailed with a loss of N0.75, just as Evans Medical Plc went down by N0.33. University Press Plc shed N0.32, while Transnational Express Plc and  Costain (W.A) Plc  declined by N0.32 and N0.12 in that order. Wema Bank Plc and IPWA Plc shed N0.08 and N0.06 respectively.

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