Stock Exchange Ends Year on Positive Note

Photo L-R: Dipo Omotoso, Head, Product Management, The Nigerian Stock Exchange (NSE); Favour Femi-Oyewowole, Head, Information Security, NSE; Ade Bajomo, Executive Director, Market Operations and Technology, NSE; Omotola Ekeinde, Nigerian Actress, Singer & Philanthropist; Bola Adeeko, Head, Corporate Services Division, NSE, and Yetunde Ojo, Head, Technology, NSE at the 2015 Year End Closing Gong Ceremony at the Exchange today.

The Nigerian equities market All Share Index (ASI) ended the year on a positive note appreciating 3.1% today to settle at 28,642.3pts. Amid intense political tension, tumbling oil prices and macroeconomic pressures in the domestic and global space, the local market benchmark index depreciated 17.4% in 2015 relative to -16.2% in 2014. Market capitalization improved N297.3bn at the end of today's trade settling at N9.9tn from N11.5tn at the end of 2014.  Today's trade remained driven by last-minute rally in NIGERIAN BREWERIES (+9.7%), ETI (+5.0%) and DANGCEM (+3.1%). Market activity stayed mixed as total volume traded contracted by 82.1% to 252.2mn units while aggregate value traded expanded 98.0% to N3.9bn.

Banking Index Sinks 23.6% in 2015
Sector performance broadly mirrored that of the broader index as all indices closed higher today. The Consumer Goods index appreciated the most at 4.9% at the end of trading session but depreciated 17.4% for the year. The Industrial Goods index rose 3.7%, also emerging the only gainer for the year with 1.3% Y-o-Y return.

We believe this may be linked to the 20.1% Y-o-Y appreciation recorded by WAPCO due to capacity expansion via acquisitions and stronger volume sales in Nigeria which pushed up the company's valuation and improved investor's sentiment in the ticker. The Oil & Gas index was up 2.9% today but depreciated 6.2% Y-o-Y in line with the observed pressures in the space -- lower oil prices and delayed subsidy payments. In the Financial services space, the Banking Sector index rose 1.8% today but tumbled 23.6% for the year- the worst across sectors -- as a combination weak macroeconomic pressure and stiff policy regulations weighed on profitability and assets quality which dampened investor's sentiments. The Insurance index also gained 0.5% today but dipped 4.7% Y-o-Y.

Sentiment Boosted by Year End Rally
Market sentiment measured by market breadth jumped to 6.6x as 33 stocks advanced while 5 declined. Price winners for the day were NAHCO (+10.2%), TRANSEXPR (+9.7%) and NIGERIAN BREWERIES (+9.7%), while CADBURY (-5.0%), CUTIX (-2.9%) and SKYEBANK (-2.5%) led the list of price losers. We believe the rally observed in the last two trading days of the year remained associated with the end of the year portfolio adjustment by fund managers. With the expectation for massive capital spending and expansive budget in 2016, we anticipate a better performance for Nigerian equities in 2016 however key risk in the horizon remains exchange rate uncertainties and a bearish oil price outlook.