Stock Market’s Performance In June

Though the month of June, 2010 has come and gone but for equity investors on the Nigerian bourse, it will not be easy to forget. This is because investors’ expectations were not met in the month which was dominated by pesistent decline in stocks prices making analysts to tag the month as the worst since this year.

The recent report by the Nigeria Stock Exchange (NSE) on market performance for the month under review explains it all.

The NSE 30 Index and Sectoral Indices The NSE-30 Index dropped by 30.45points or 2.8% to close at 1053.92. In the month of May, the NSE-30 Index rose by 0.43 points or 0.16%. On quarterly basis, NSE-30 Index appreciated by 13.70 points or 1.72% during the second quarter compared to an appreciation by 212.23 points or 23.2% recorded during the first quarter. The YTD change in the NSE-30 index was 225.93 points or 24.9%. In June, all the four sectoral indices declined compared to two in the preceding month.

The NSE Food/Beverage Index declined by 22.06 points or 2.5% to close at 839.31, the NSE Banking Index dropped by 12.50 points or 3% to close at 391.25, the NSE Insurance Index dropped by 11.40 points or 5.8% to close at 186.06 while the NSE Oil/Gas Index dropped by 7.42 points or 1.75% to close at 410.33. See Table 8 for the summary of movements in the indices.

The Market Return The stock market recorded a monthly return of -4.51% on dividend-adjusted basis, compared with the -1.6% recorded in May culminating in a year to date average return of 5.08%. Only one subsector, Breweries recorded positive return of 2.3% compared to ten (10) subsectors in the preceding month that recorded positive returns of between 0.21% and 20.6%. Also, thirty-one (31) subsectors recorded negative returns of between 0.31% and 17.6% in June compared to twenty-one (21) subsectors that recorded negative returns of between 0.7% and 14.01% in May. Nineteen (19) equities recorded positive returns of between 0.16% and 31%. Petroleum (Marketing) stocks occupied three of Top 5 slots.

Also, 126 equities recorded negative returns of between 0.01% and 27.62%. Last month, forty-three (43) equities recorded positive returns of between 0.4% and 61.3% while ninety-five (95) equities recorded negative returns of between 0.05% and 28.1%. During the first half of the year, twenty-one (21) subsectors recorded positive return of between 0.3% and 66.94% while ten (10) subsectors recorded negative returns of between 0.33% and 35.2%. On equity basis, eighty-nine (89) equities recorded positive cumulative return of between 0.27% and 226.17% while 73 equities recorded negative half year average return on a dividend-adjusted basis of between 0.45% and 76.9%.

Market Turnover The downward trend in stock market indicators continued in June. The market recorded a turnover of 7.11 billion shares valued at N60.73 billion in 172,861 deals during June in contrast to a total of 8.25 billion shares valued at N76.14 billion exchanged during May in 180,489 deals. Consequently, trading volume and value depreciated by 14% and 20.2%, respectively. Trading volume and value had dropped by 35% and 30%, respectively in May. Trading days in June were 22 compared to 18 in May. There were no transactions through the stock market on the Federal Government Development Stocks, sub-National Bonds and Industrial Loans/Preference Stocks sectors. Aggregate stock market turnover during the first half of the year were 54.83 billion shares valued at N436.97 billion exchanged in 1,174,481 deals. In the comparable period during 2009, the market recorded turnover of 46.4 billion shares valued at N301.54 billion in 902,804 deals.

In June, the Banking subsector was the most active (measured by turnover volume) with traded volume of 3.8 billion shares valued at N33.4 billion exchanged in 71,090 deals while the Insurance subsector was second with traded volume of 898.4 million shares valued at N1.12 billion exchanged in 9,057 deals. The Information and Communication Technology subsector was third with transaction volume of 332.5 million valued at N388.3 million traded in 1,573 deals while the Food/Beverages and Tobacco subsector was fourth with transaction volume of 248.53 million shares valued at N6.1 billion traded in 14,927 deals. The ASEM/PRIPEX (formerly Second-Tier Securities) subsector was fifth with transaction volume of 209.1 million shares valued at N104.84 million traded in 73 deals.

A total of 182 equities out of the listed 214 were traded during the month compared to 174 in May. Banking stocks accounted for Top 7 most active list. Skye Bank Plc was the most active stock with transaction volume of 518.93 million shares followed by Zenith Bank Plc with 471.0 million shares while First Bank of Nigeria Plc placed third with 454.12 million shares. UBA Plc placed fourth with 330.85 million shares and Guaranty Trust Bank Plc occupied the fifth position with 324.0 million shares. See Table 2 for the list of the most active stocks. In May, the 10 most active stocks accounted for 4.56 billion or 36% of the total shares traded during the month. Market Capitalization

The market value of the 260 listed securities closed at N8.22 trillion, down by 2.5% from N8.425 trillion recorded in May. Market capitalization had declined by 0.4% in May. The sustained decline in market capitalization resulted from the drop in equity prices during the month coupled with the delisting of two FGN bonds. Four subsectors recorded increased market capitalization of between 2.9% and 10.03% while twenty-seven subsectors suffered reduction in market capitalization of between 0.01% and 17.71%. Four subsectors did not record any change in market capitalization. However, in the preceding month, ten subsectors recorded increased market capitalization of between 0.45% and 14.84% while twenty-one subsectors suffered reduction in market capitalization of between 0.13% and 31.11%. Four subsectors did not record any change in market capitalization. The 214 listed equities accounted for N6.17 trillion or 75.1% of total market capitalization, down by 3.1% from the N6.37 trillion or 75.6% recorded in May. See Table 3 for the structure of equity market capitalization.

The proportion of market capitalization accounted for by the Top 10 equity subsectors dropped by 3.02% from N6.05trillion to N5.9trillion. Consequently, the share of the Top 10 equity subsectors in the total equity market capitalization dropped 95% in May to 71.4% in June. Though Nigerian Breweries Plc retained the status of the most capitalized stock on the market, it however suffered 2.02% drop in market capitalization from N486.3 billion to N476.44 billion. Zenith Bank Plc displaced First Bank of Nigeria Plc to occupy the second position with a 2.22% increase in market capitalization from N423.85 billion to N429.8 billion. FBN Plc suffered 8.03% drop in market capitalization to occupy the third position. Guaranty Trust Bank Plc and UBA Plc retained the fourth and fifth ranks though both suffered 3.5% and 2.4% drop in market capitalization, respectively.

With 2.9% decline in market capitalization, Skye Bank Plc displaced Cadbury Nigeria Plc on the Top 20 table. Cadbury Nigeria Plc suffered 11.8% decline in Market capitalization. Cadbury Nigeria Plc also dropped out of the NSE-30 Index having made an entry in March 2010. Fifteen of the Top 20 companies suffered declines in market capitalization while five recorded increased market capitalization when compared with the preceding month. In May, ten of the Top 20 companies recorded increased market capitalisation while nine suffered declines in market capitalisation.

The market capitalisation of the Top 20 companies totaled N4.4 trillion, representing 71% of equity market capitalization, 53.2% of the total market capitalization and down by 2.43% from the N4.48 trillion of the preceding month. The value of Federal Government Bonds dropped by 0.53% from N1.94 trillion to N1.93 trillion consequent on the delisting of two bonds. The values of sub-National bonds, Preference Shares and Corporate Bonds remained at N91.5 billion, NN4.6 billion and N22.23 billion, respectively. However, the share of Federal Government Bonds in the aggregate market capitalization rose from 23.02% to 23.5% while the contributions of  sub-National bonds rose from 1.09% to 1.1%. Also the shares of Preference Shares and Corporate Bonds rose from 0.05% and 0.26% to 0.06% and 0.27%, respectively. The combined share of FGN Bonds, sub-National bonds, Preference Shares and Corporate Bonds dropped by 0.5% from N2.05 trillion to N2.04 trillion.