Naira dips by 22.1% as equities market records N45.3b turnover

The naira depreciated by 22.1 per cent to N996.75/$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM), with total turnover falling by 7.4 per cent week-to-date (w/w) to $545.89 million.

Trades were consummated within the N700 and N1,100/$ band.

In the forwards market, the exchange rate declined over the past month by 9.9 per cent to N873.59/$, three-month (-10 per cent to N890.19/$), six-month (-10.3 per cent to N918 /$) and one-year by 9.5 per cent to N969.18/$.

Reacting to the development, analysts at Cordros Capital said: “Looking ahead, we expect FX liquidity conditions to improve slightly, albeit still frail relative to historical levels, as it appears the CBN has regained its momentum regarding FX reforms.

“Consequently, if the recent convincing actions by the policymakers to turn the tide are sustained, we expect the local currency pressures to ease. Nonetheless, we expect foreign investors to be keenly watching the development in the FX space about the expected FX inflows as promised by the authorities, CBN’s recent actions in clearing FX backlogs and firm direction of short-term interest rates.”

On the equities market, a turnover of 2.5 billion shares worth N45.3 billion was recorded in 32,815 deals on the floor of the exchange, in contrast to a total of 2.5 billion units, valued at N40.6 billion that was exchanged in 37,959 deals in the preceding month.

A breakdown of activities in the equities market last week showed that the financial services industry (measured by volume) led the activity chart with 1.7 billion shares valued at N28.8 billion traded in 14,655 deals, thus contributing 66.44 per cent to the total equity volume and value respectively.

The oil and gas industry followed with 407.35 million shares worth N1.7 billion in 3,273 deals. The third place was the ICT industry, with a turnover of 120.2 million shares worth N7.3 billion in 2,912 deals.

Precisely, trading in the top three equities namely Japaul Gold and Venture Plc, FBN Holdings and United Bank for Africa Plc (measured by volume) accounted for one billion shares worth N14.1 billion in 5,263 deals, contributing 40.8 per cent to the total equity turnover volume.

On the price movement chart, the market recorded gains on all trading sessions, driven by increased demand for BUA Cement (+6.5 per cent), FBNH (+12.4 per cent) and Seplat (+3.9 per cent).

With the development, the all-share index (ASI) and market capitalisation appreciated by 0.9 per cent to close the week at 70,849.38 and N38.925 trillion respectively, resulting in Month-to-Date and Year-to-Date returns of +2.3 per cent and +38.2 per cent, respectively.

Similarly, all other indices finished higher except NGX Insurance, NGX AFR Bank Value, NGX MERI Growth and NGX Sovereign Bond which depreciated by 0.53 per cent, 0.68 per cent, 1.4 per cent and 2.25 per cent respectively while the NGX ASeM index closed flat

Meanwhile, sectoral performance was mixed as the oil and gas (+2.9 per cent), industrial goods (+2.7 per cent), and banking (+1.2 per cent) indices recorded gains while the insurance index depreciated (-0.5 per cent).

Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said:” As investors increased buying interests in equities as part of hedging against the high inflation that has supported some company performances, as reflected on their latest scorecards, this, is likely to support their payout in form of dividend upon which share prices feed.

“This mixed bag of rising fixed-income market yields will continue to influence portfolio management, rebalancing and readjustment. It is time to shop for undervalued stocks, sector rotation, go for defensive stocks at the next insider playing opportunity,” he said.

Cordros Capital said: “In the coming week, we expect the bears to book profit across most counters following the recent market rally.

Consequently, we expect a “choppy theme” even as institutional investors search for clues on the direction of yields in the FI market.

“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.”

Vetiva Dealings and Brokerage said: “It was a positive trading week, with decent gains recorded in most of the sectoral indices. “Given the bullish close the market had witnessed in the last three weeks, we might see profit-taking activities dominate the market early next week, while further bargain hunting may likely resume in the later session of the week.”

Thirty-seven equities appreciated during the week lower than 63 equities in the previous week while 43 equities depreciated, higher than 29 in the previous week, while 75 equities remained unchanged, higher than 64 recorded in the previous week.

A total of 32,861 units of Exchange Traded Products (ETPs) valued at N4.45 million were traded last week in 143 deals compared to a total of 33,418 units valued at N2.9 million transacted in 117 deals during the preceding week.

Also, 62,233 units of bonds, valued at N65.981 million were traded in 16 deals compared to a total of 33,049 units valued at N30.9 million transacted in 42 deals on November 3, 2023.