A Review of the Nigerian Energy Industry

NSE: N441.25bn worth of securities traded in 3Q14

Floor of the Nigeria Stock Exchange
Floor of the Nigeria Stock Exchange

28 December 2014, Lagos – Activities on the Nigerian Stock Exchange (NSE) were mixed in the third quarter of the year with the total volume of traded securities for the period put at 26.8billion shares, representing 11.4 per cent rise.

Similarly, the value of traded securities was said to have increased by 48 per cent to N441.25 billion in 312,482 deals in the review period, compared with 24 billion shares, valued at N298.19 deals in the preceding quarter.

According to the Central Bank of Nigeria’s Economic Report for the third quarter of the year, which was made available last week, the Financial Services Industry (measured by volume) led the activity chart with 20.6billion shares valued at N203.6billion, traded in 149,030 deals, thus contributing 77 and 46.2 percent to the total equity turnover volume and value, respectively, compared with 15.5 billion shares, valued at N149.6 billion in 148,745 deals recorded in the preceding quarter.

The report showed that the banking subsector of the financial services sector was the most active subsector during the review quarter.

Also, aggregate market capitalisation for all listed securities (Equities and Bonds) stood at N18.9 trillion at the end of the quarter under review, indicating a decline of 0.7 per cent below the level in the preceding quarter. “Similarly, market capitalisation for the listed equities fell by 3.0 per cent below the level in the preceding quarter to close at N13.6 trillion at the end of the review quarter. Listed equities accounted for 71.8 per cent of the aggregate market capitalisation,” the report said.

Meanwhile, the All-Share Index, which opened at 42,482.48 at the beginning of the quarter, according to the report, closed at 41,210.1, representing a decline of 3.0per cent below the level at the end of the preceding quarter.

“At end -September 2014, the NSE AseM, NSE Insurance, and the NSE Industrial indices rose by 0.02, 1.6 and 3.3percent respectively, above their levels in the preceding quarter to 951.09,149.19 and 2,754.67 while the other four sectoral indices; NSE Oil & Gas, NSE Banking, NSE Consumer goods, and NSE Lotus Islamic indices dropped below their levels in the preceding quarter by 1.6,1.8, 2.4 and 5.2 per cent, to close at 460.84, 425.15, 1032.43 and 2,725.87, respectively, at the end of the review period.

However, current trends in the market showed that technically, Nigerian stock market is in a strong bearish mode both in short and long term periods. The battered market breadth, in the recent weeks, according to analysts from Proshare Nigeria, further revealed strong pessimistic postures of investors towards investment in equities.

In addition, analysis has revealed that the Nigerian market is leading the league of bearish markets on the global performance table.

A recent report by Proshare Nigeria said an extensive analysis further revealed the performance of NSE-ASI to be far below average performance of African indices across the continent. “The average performance of the African indices closed at +8.39 percent as at December 9 2014 while The NSE-ASI closed at -20.32 per cent. As at December 11, 2014, Nigerian market net value has depleted by N2.97trillion so far in the year, with strong indication to deplete further by the year end.

“The uncertainties building up in the socio-political circles with growing economic pressure that resulted in the devaluation of naira could not be isolated from the factors responsible for this bearish trend. More so, whenever there is high uncertainty, market tends to reacts irrationally and most times with high premium.

This has seen some many blue chips, high priced and big capped stocks trading at their low across board while other categories appeared weathered with new 52-weeks low. For instance, Nestle opened the year with N1,185, traded as high as N1,200 but now trading at N774.78kobo, indicating -35.44 per cent loss,” the report stated.

In another development, aggregate banking system ’s credit (net) to the domestic economy, which was put at N16,265.2 billion, grew by 7.2 per cent at the end of the third quarter of 2014, in contrast to the decline of 1.1 and 0.5 per cent at the end of the preceding quarter and the corresponding period of 2013, respectively.

The CBN explained that the development relative to the level at the end of the second quarter of 2014 reflected the growth of 22.2 and 4.1 per cent in net claims on Federal Government and private sector, respectively.

However, banking system’s credit (net) to the Federal Government, at the end of the review quarter, rose by 22.2 per cent to negative N1, 393.5 billion, in contrast to the decline of 24.8 and 25.5 per cent at the end of the preceding quarter and the corresponding period of 2013, respectively.

The development relative to the level at the end of the preceding quarter was attributed to the increase in banking system’s holding of Federal Government treasury securities, particularly the treasury bills.

The report said, “At the end of the third quarter of 2014, banking system’s credit to the private sector rose by 4.1 percent to N17, 658.8 billion, compared with the 1.1 and 3.7 per cent increase in the preceding quarter and the corresponding quarter of 2013, respectively.

“The development relative to the preceding quarter,” according to the report, reflected the growth of 7.7per cent in claims on the core private sector.
*Festus Akanbi – Thisday

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