The equities market in the week traded southwards, returning -0.03 percent WoW, though market mood could be said to be largely positive. Analysis of volume and value of transactions shows that volume traded increased significantly by c.50 percent, while value traded swung in the opposite direction, declining by a significant 32 percent.
From sector viewpoint, Oil and Gas posted the highest return WoW (3.25%) followed by Insurance (2.56%), Banking (2.55%), and Healthcare that inched up marginally by 0.02 percent. Profit-taking however played out in Industrial, Conglomerate, Agriculture and Consumer goods, each dipping by 1.72 percent, 1.65 percent, 1.39 percent, and 1.13 percent, in that order. We analyse further the prevailing sentiments in the respective sectors cum our expectations for the coming week.
Banking: Resurgence from previous weeks’ lull
During the week, news filtered into the market that six banks were fined a total of N392.77 million by the Central Bank of Nigeria for violations of Nigerian banking laws in 2013. The banks, which included Diamond, FCMB, Skye, Sterling, UBA and Zenith, were found guilty of breaching different parts of the ‘Banks and Other Financial Institutions Act’ (BOFIA). Zenith was the most guilty paying the highest fine of N276 million.
This revelation however did not have major impact on the stock prices this week as prices did not seem to be adversely affected. The banking sector continued to receive investor’s interest as the positive sentiment surrounding the stocks continued. We think the surge in recent weeks (save for the lull witnessed last week) has been due partly to investors taking position ahead of Q2:2014 results. Out of the 15 publicly traded banking stocks 12 returned positive this week with only Diamond, FCMB and UBN shedding 1.47 percent, 0.96 percent and 0.78 percent, respectively.
The major gainers in the sector this week were UBA, Guaranty and Stanbic, which gained 7.55 percent, 4.2 percent and 3.6 percent in the week. Sector P/E and P/BV stand at 8.07x and 0.87x, respectively, relative to the market ratios of 13.38x and 2.43x in that order in our view will continue to buoy positive for the sector. We expect most of the banks to release positive results for Q2:2014 for which we believe informed investors are taking position ahead of.
Insurance: Positive momentum rebounds
The sector bounced back from the negative return it posted in the preceding week as position taking in major counters outweighed profit-taking to put WtD return at 2.56 percent. Top gainers for the week were PRESTIGE, WAPIC, CUSTODYINS, MBENEFIT, MANSARD, CONTINSURE and ROYALEX, returning 5.88 percent, 5.56 percent, 5.06 percent, 4.00 percent, 3.73 percent, 2.88 percent and 1.92 percent in that order, while the laggards were AIICO and OASIS, shedding 2.38 percent and 1.85 percent, respectively.
Investors’ buy interest in CUSTODYINS stayed for the fifth consecutive week, which we attribute to the company’s fantastic Q1:2014 result cum expectations for the second quarter. We expect the positive sentiments towards the counter to persist as the company continues to enjoy synergy from its merger with Crusader Insurance.
As has been the trend for most trading weeks so far this year, we expect some of the stocks that gained during the week to shed some gains in the coming week. Others that closed negative may witness some level of price gyration.
Consumer Goods: We expect an impressive FY result from INTBREW
Performance of the consumer goods sector was rather mixed, though a good majority of the listed stocks closed the week positive. Sector index as measured by NSEFB10 declined 0.62 percent, reflecting sell sentiments on the major stocks in the sector.
PZ led the sector gainers with a price appreciation of 6.94 percent, other gainers include HONYFLOUR, CADBURY and UNILEVER with 4.50 percent, 3.07 percent and 2.44 percent appreciation, respectively. On the flip side, NASCON depreciated the most, shedding 11.74 percent after it was marked down on a dividend of N0.90 declared by the company during the week. NESTLE and FLOURMILL were other decliners in the food segment.
