The performance of the equity market in the first quarter of 2022 (Q1 2022) showed that the unusually bullish trend that earned Nigeria the best performing stock exchange in the world in 2020 – a year that businesses experienced the worst operating environment, appears to be adjusting to economic realities. However, key sectors maintained dominance as the economy gradually recovered from the festering sores of the COVID-19 pandemic. BAMIDELE FAMOOFO reports.
Data from the Nigerian Exchange for the period showed that trading in Q1 2022 declined in both total turnover of shares traded and the values achieved for the 12 weeks of the quarter compared to the preceding period. In Q1 2022, a total of 21.17 billion turnover was recorded in the shares traded in various deals reflecting a 10.7 percent growth lower than 31.79 billion turnover shares in Q1 2021.
In terms of total value, the sum of N288.22 billion was achieved in Q1 2022 for the 21.17 billion shares turnover as against N311.75 billion realised in the trading of 31.78 billion in Q1 2021 – showing a drop of 7.5 percent.
A study of the NGX 2022 Q1 statistics further showed that January recorded N158.29 billion from 7 billion shares turnover, while 6.48 shares were traded in February yielding N92.55 billion for the market. For the month of March, 7.68 shares turnover created a value of N98.4 billion.
During the period, the Financial Services sector topped the activity charts followed by the Consumer Goods, the Conglomerates Industry and the ICT sectors.
Market Capitalisation gained N2.2 trillion as the market closed positive with N25.311 trillion at the end of the quarter (shown in the last week of March), as against N23.183 trillion recorded at the close of the first week’s trading in January. Consequently, the All-Share Index also recorded a positive closure at 46,965.48 compared with 43, 026, 23 in the first week of January – a change of 3,939.25 basis points.
A significant development in the market during the period is the impact of the telecommunications (telecoms) sector. The listing of two telecom giants, Airtel Africa Plc and MTN Nigeria Communications Plc, altered the fortunes of the equity market. Though not directly captured in the same sector with ICT, it helped to uplift the market in the ICT-related activities. The ICT sector which had operated in what used to be the dormant stock group over the years, has transformed into the active stock category, going by the Q1 report.
“When the telecoms companies are eventually granted full PSB license the financial services market will be on its way to another level because it will spur competition in the industry in a way that makes financial inclusion targets easier to achieve and that will be good for the economy
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As stated, data from the Q1 report revealed that ICT joined the league of bouncing sectors (like the Financial Services, the Conglomerates and the Consumer Groups) to drive the equity market into positive territory at the end of the period.
MTN Nigeria Communications Plc was listed on the Premium Board of the NGX, by introduction, 20.35 billion ordinary shares on May 16, 2019 at N90 per share. Following the successful listing, MTN Nigeria became the first Mobile Network Operator to be listed on the Nigerian Stock Exchange. Airtel Africa Plc was listed on July 10, 2019 with 3.758 ordinary shares at N363 per share.
The two telecoms firms are performing outstandingly on the Exchange as MTN remains the largest company by revenue while Airtel shares a slot with Nestle as the highest-priced stock on the nation’s bourse. Airtel share price as at Friday, April 8 was N1, 260.40 while Nestle was N1, 387.70 on the same day.
After 20 years of operation in Nigeria, the two leading telecoms were given licence in principle to commence Payment Service Bank operations, by the Central Bank of Nigeria. The PSB licence empowers the operator to provide financial services through digital means to low-income earners and the unbanked – people that do not use banks or banking institutions for transactions.
According to the announcement, Airtel will operate PSB via its Smartcash Payment Service Bank Limited while MoMo Payment Service Bank Limited will be MTN’s PSB. The essence is to bring more people into the financial inclusion space and reduce Nigeria’s huge population of unbanked.
The development was a huge success to the Financial Inclusion scheme of the CBN. It could be recalled that Nigeria failed to meet its National Financial Inclusion Strategy target for 2020 to include 80 percent of its adult population into the financial system. This means that 36 percent of Nigerian adults, or 38.1 million of the country’s 106 million (18 years and above) adults, remain completely financially excluded.
Segun Ogunsanya, CEO, Airtel Africa, said on the occasion of the firm’s listing, “I am very pleased that Smartcash has been granted an approval in principle to operate a service bank business in Nigeria. We will now work closely with the Central Bank to meet all its conditions to receive the operating licence and commence operations.
“The final operating licence will enable us to expand our digital financial products and reach the millions of Nigerians that do not have access to traditional financial services. I am looking forward to working closely with the government, the Central Bank and traditional financial institutions to expand financial inclusion and meet the evolving needs of our customers and the economy.”
Uto Ukpanah, company secretary at MTN Nigeria, said, MTN Nigeria remained optimistic that it would eventually get the PSB licence.
“This is the first step in a long process that would lead to eventual approval. In other words, MTN Nigeria would be required to fulfill a number of conditions, even as ‘the decision to issue a final approval is firmly within the regulatory purview of the CBN’. MTN Nigeria expressed optimism that it would eventually get the PSB license, and reaffirmed its commitment to the financial inclusion agenda of the CBN in Nigeria,” the statement read.
There has been clamour from the financial services sector and the media for the two telecom firms to be licensed for PSB operations. The CBN granted licences to Money Master PSB, a subsidiary of Glo and 9PSB, a subsidiary of 9mobile in 2020. The clamour heightened with the unveiling of the Central Bank Digital Currency, (eNaira) by President Muhammadu Buhari on October 25, 2021.
A stock market analyst, Mike Ehimoje, sees the coming of the telecoms sector to the Nigerian equity market as a remarkable game changer.
“When the telecoms companies are eventually granted full PSB license the financial services market will be on its way to another level because it will spur competition in the industry in a way that makes financial inclusion targets easier to achieve and that will be good for the economy,” Ehimoje said.
Portfolio investment
Top 10 Stockbrokers in the Nigerian Exchange Limited executed transactions valued at N386.03billion as at March 4, 2022.
They were responsible for about 69.5 percent total market turnover recorded on the Exchange in the period. The Stockbroking firms also accounted for 54.06 percent of turnover volume in the market in the same period with over 15.36billion shares traded.
APT Securities and Funds emerged the toast of investors as it executed more deals both in volume and value terms in the review period.
APT is a stockbroker firm and also in financial securities trading based in Lagos Nigeria. She is a member of the Nigeria Stock Exchange.
“Top 10 Stockbrokers in the Nigerian Exchange Limited executed transactions valued at N386.03billion as at March 4, 2022. They were responsible for about 69.5 percent total market turnover recorded on the Exchange in the period. The Stockbroking firms also accounted for 54.06 percent of turnover volume in the market in the same period with over 15.36billion shares traded
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The Company accounted for 25.37 percent of total trade value in the period as it brokered deals valued at about N141.02billion in exchange of 3.92billion shares representing 13.8 percent of total market turnover volume.
Meristem Stockbrokers Limited was second on the value table with 66.19billion worth of share deals, accounting for 11.9 percent of turnover value while EFG Hermes Nigeria Limited brokered deals worth 32.64billion in the period.
Others Stockbroking firms on the top 10 turnover value list include Stanbic IBTC Stockbrokers Limited, N31.37 billion, representing 5.64 percent; Cordros Securities Limited, N28.82 billion or 5.19 percent; Cardinal Stone Securities Limited, N28.73 billion or 5.17 percent and Rencap Securities (Nig) Limited accounting for 3.82 percent of value with N21.24 billion.
Other value drivers in the market in the review period are CSL Stockbrokers Limited, N16.43 billion or 2.96 percent; Vetiva Capital Management Limited, N10.65 billion or 1.92 percent and Chapel Hill Denham Securities Limited, N8.96 billion or 1.61percent.
On the volume chart was Morgan Capital Securities Limited ranking behind APT Securities Limited with about 3.25billion shares accounting for 8.26 percent of aggregate turnover while Cardinal Stone Securities Limited traded 2.30billion shares from January to end of first week in March.
Cordros Securities Limited accounted for 5.56 percent of volume with about 1.58billion shares. Meristem Stockbrokers Limited, 1.36billion shares or 4.8 percent; EFG Hermes Nigeria Limited, 1.0billion shares (3.53%); Stanbic IBTC Stockbrokers Limited, 822.28million shares (2.89%); United Capital Securities Limited, 816.45 million ( 2.87%); CSL Stockbrokers Limited and Apel Asset Limited, 690.09 million and 521.56 million representing 2.43 percent and 1.84 percent of turnover volume respectively.
