Equities Gain N62bn As Positive Sentiment Returns

March 23, 2020
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Positive sentiment is gradually returning to the nation’s capital market, due to a number of measures the Nigerian authorities have announced to shore up the economy from the beating it has received from the coronavirus outbreak.

The measures include the extension of moratorium on CBN facilities, reduction of interest rate from 9 to 5 percent on CBN facilities; creation of N50 billion facilities through NIRSAL Microfinance Bank for households and SMEs affected by Covid 19; credit for the healthcare industry and regulatory forbearance, among others.

Last Friday, equities listed on the Nigerian Stock Exchange gained N62.5 billion as the market capitalization rose to N11.57 trillion compared with N11.51 trillion on Thursday, March 19, 2020.

Another sign of the gradual return of calm was that on Friday last week, 18 listed firms appreciated in prices with three stocks-Prestige Assurance, Chams and UnionDAC recording the 10 percent daily maximum gains after trading, whereas on March 19, only 13 stocks appreciated and those stocks were led by African Prudential, 9.91 percent; Jaiz Bank, 9.76 percent, Cornerstone Insurance, 9.73 percent; Sterling Bank, 9.09 percent, and Livestock Feeds, 9.09 percent.

With that rally, the All-Share Index of the NSE rose by 0.54 percent last week Friday over its closing figure the previous day, but still not sufficient as on week on week basis, the ASI closed in the negative territory at -2.35 percent and -17.30 percent year to date.

The outbreak of Covid 19 sent shivers down the world and the hardest hit is stock exchanges across continents. On the Nigerian bourse, year to date, only 10 stocks have appreciated in prices.

The stocks are led by the Law Union and Rocks which continues to attract interest from investors following the acquisition bid made by Verod Capital to acquire 100 percent shareholding in the company.  Verod Capital is to buy a share from existing shareholders at N1.23 per share.

Consequently, Law Union and Rock closed last Friday at N1 per share, which amounted to 100 percent price appreciation year to date. Beta Glass closed at N70 per share representing 30.1 percent year to date gain while Cornerstone Insurance and UBN closed at N0.58 and N7.20 per share representing 28.9 and 20 percent share price appreciation respectively.

Speculation might be the reason for the rise in the share price of Union Bank because as of last week, rumors were rife that a tier-one lender, Zenith Bank was in talks with Union Bank management for the possibility of a merger and acquisition deal.  The two institutions have refuted the media reports.

“The attention of Union Bank has been drawn to recent online speculation suggesting an agreement with Zenith Bank Plc to acquire Union Bank.

‘’Union Bank wishes to state that there is no such agreement and no bidding offer has been made by anyone to either its shareholders or the board of directors of Union Bank’’, Somuyiwa Sonubi, company secretary said in a notice to the NSE.

Furthermore, construction giant, Julius Berger, closed at N23.70 per share to record 19.1 percent year to date price appreciation last Friday. Livestock closed at N0.58 representing 16 percent price appreciation YTD; AIICO, NAHCO, BUA Cement and United Capital closed last Friday at N0.78, N2.50, N35.30 and N2.41 per shares representing YTD gains of 8.3%, 4.2%, 0.9%, and 0.4 percent respectively.

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