March 3, 2016/Cordros Research

The domestic bourse delivered a rebound (+2.74% m/m) from January’s 16.50% disappointing loss. The gain was spurred majorly by bargain hunting, amid dividend and earnings expectation ahead of FY’15 earnings releases. The market’s positive performance came despite persistent pressure on the price of oil – and by extension, subdued confidence in the economy. Although a Saudi-Russia led proposed output freeze (at January levels) surfaced in the month, final decisions on the agreement are to be made in a meeting scheduled to hold in March.

Interestingly, the Oil & Gas index performed impressively, recording the highest m/m gain of 19.76%, primarily driven by strong rallies in SEPLAT (+79.67%) — following the successful acquisition of OML 53 from Chevron after a protracted court case — and FO (+14.83%). The Industrial Goods (+6.86% m/m) index also attracted investors’ interest, as reflected in the relatively solid gains recorded in heavyweight DANGCEM (+9.96%) and WAPCO (+5.65%).

On the flip side, the Financial Services sector performed poorly, following losses in the Banking (-3.75% m/m) and Insurance (-4.42% m/m) indices, owing to declines recorded by ZENITHBANK (-12.21% m/m), GUARANTY (-4.71% m/m), AIICO (-6.98% m/m) and CONTINSURE (-2.11% m/m) respectively. Notably, the Banking index moved lower as the issuance of two profit warnings in two months of 2016 (by FBNH and FCMB) confirmed investors’ skepticism of the banking sector. The Consumer Goods (-2.70% m/m) index similarly declined, as NESTLE (-3.38% m/m) and GUINNESS (-2.16% m/m) both failed to impress.

Market breadth was notably negative, with 27 gainers — topped by SEPLAT (+79.67%) — versus 53 losers — led by CONOIL (-29.55%).

Volume traded expanded by 118.52% to 12.39 billion shares, worth N52.72 billion and traded in 62,003 deals, compared to the 5.67 billion shares valued at N42.05 billion that exchanged hands in 67,483 deals in January. WEMABANK (3.82 billion), TIGERBRANDS (3.32 billion) and FCMB (682.76 million) accounted for 63.18% of total volume traded during the month, while GUARANTY (N8.99 billion), ZENITHBANK (N6.82 billion) and SEPLAT (N5.53 billion) accounted for 40.49% of total value of transactions.

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Monthly markets review – Overview of markets in February 2016