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Source The Guardian: Moses Ebosele And Femi Adekoya, December 14th 2009

DESPITE heavy price losses suffered by most blue chip stocks, which strengthened the hold of the bears on the equities sector of the Nigerian Stock Exchange (NSE) last week, trading activities at the Over-the-Counter bond market recorded a boost as investors raise their stakes on bonds.
At the close of transactions on Friday, a turnover of 254.1 million units worth N300.2 billion was recorded, in contrast to a total of 185.23 million units valued at N209.9 billion exchanged in the previous week.
Although there were no transactions in the Federal Government Development Stocks, State Government Bonds and Preference Stocks sectors, the 5th FGN Bond 2028 Series 5 was the most active bond with a traded volume of 37.82 million units valued at N62.9 billion, followed by the 5th FGN Bond 2013 Series 4 with 24.1 million units valued at N26.2 billion.
In the equities sector, a turnover of 1.56 billion shares worth N12.14 billion was recorded last week, in contrast to a total of 1.45 billion shares valued at N8.73 billion exchanged the previous week.
Transactions for last week included a total of 364,000 units of Crusader (Nigeria) Plc Unsecured Convertible Debenture Stock 2013 worth N364.0 million.
With price losses out-numbering price gains in the equities sector, corporate performance indicators of the Exchange nose-dived by 3.38 per cent.
Specifically, the All-Share Index dropped by 722.74 points from 21,381.83 points on Monday to 20,659.09 points on Friday, while market capitalisation closed lower at N4.91 trillion from N5.08 trillion at which it opened the week.
For the sectors, two of the four sectoral indices appreciated. For instance, the NSE Food/Beverages Index appreciated by 2.6 per cent to close at 511.33 points, while the NSE Insurance Index appreciated by 0.45 per cent to close at 249.81 points.
However, The NSE Banking Index dropped by 6.15per cent to close at 333.47 points, while the NSE Oil/Gas Index dropped by 0.23 per cent to close at 290.55 points.
On the week’s price movement chart, UAC Nigeria Plc led 63 other stocks to suffer price depreciation dropping by 349 kobo to close at N36.01 per share, followed by Julius Berger Nigeria Plc with 281 kobo to close at N26.09 per share, while United Bank for Africa lost 195 kobo to close at N10.50 per share.
Furthermore, Incar Nigeria Plc, Union Bank of Nigeria Plc, Ecobank Nigeria Plc, Cadbury Nigeria Plc, Cement Company of Northern Nigeria Plc, UAC Nigeria Property Development Company Plc and Zenith Bank Plc all shed 152 kobo, 132 kobo, 126 kobo, 125 kobo, 105 kobo, 100 kobo and 97 kobo each to close at N6.81, N4.92, N11.76, N11.62, N12.40, N19.00 and N13.40 respectively.
On the other hand, three companies in the Food/Beverages and Tobacco sub-sector, Nestle Nigeria Plc, Flour Mills Nigeria Plc, and Dangote Flour Mills Plc all led the week’s price gainers with 502 kobo, 195 kobo and 146 kobo each to close at N239.00, N34.50, and N8.97 respectively.
A review of activities in the equities sub-sector showed that the banking sub-sector was the most active in volume terms trading 776.4 million shares worth N6.6 billion, followed by the insurance sub-sector with a turnover of 239 million shares valued at N287.8 million, while the construction sub-sector ranked third with 160.6 million shares worth N133.6 million.
Further analysis of activities in the sub-sectors showed that the volume in the banking sub-sector was largely driven by activity in the shares of First Bank of Nigeria Plc, UBA Plc and Skye Bank Plc.
Trading in the shares of the three banks accounted for 319.04 million shares, representing 41.1 per cent of the sub-sector’s turnover.
For the insurance sub-sector, its volume was boosted by activity in the shares of AIICO Insurance Plc and Custodian and Allied Insurance Plc, while that of the construction sub-sector was accounted for by 156.6 million shares of Multiverse Resources Plc worth N78.3 million.
Also last week, the Central Bank of Nigeria (CBN) in collaboration with the Securities and Exchange Commission (SEC) met with representatives of stockbrokers and other stakeholders to brainstorm on the formation of Asset Management Company (AMC).
The bill for the formation of AMC is presently before the National Assembly and it is expected to be passed into law on or before January, 2010.
Deputy Governor of CBN in charge of financial sector surveillance, Dr. Kingsley Moghalu, who was at the meeting held at SEC’s Lagos office, urged stakeholders who intend to make more input into the bill to do so, adding that the proposed company when given legal backing by the National Assembly, would meet the expectation of all stakeholders.
He explained that in the proposed company, there shall be a board of directors, which shall be responsible for the attainment of set objectives.
Chairman of SEC, Senator Udoma Udo Udoma, also used the opportunity to appeal to all the stakeholders to liase with members of the National Assembly in their respective constituencies as part of measures to ensure passage of the bill as soon as possible.
He explained that though there is need to pass the bill as soon as possible, Udoma, however, urged stakeholders to feel free to make more input.
In her submission, the Acting Director-General of SEC, Daisy Ekineh, said recovery in the capital market has been slow due mainly to the heavy leverage by operators and investors.
She said prices have been sluggish as the market continues to witness considerable imbalances in demand and supply of equities.
“Clearly, as long as the margin loan overhead persists, the market is not likely to recover as quickly as desired, as heavy sell pressure, particularly by banks, will continue to depress prices and unnerved investors.
“It is a known fact that whenever the market showed signs of recovery, the banks dump in an attempt to minimise their losses. This partly accounted for the reduction in the size of margin loans to stockbrokers from N334.7 billion at the end of June 2009 to about N200 billion at the end of October 2009.
“It is also a known fact that the burden of non-performing asset arising from margin loans has impacted negatively on the banks’ balance sheet. Therefore, there is the danger that if left unresolved, the issue of margin loans would impede effective intermediation and the ability of the market and the banking sector to grow the economy,” said Ekineh.

Nigerian Bank Nigeria CBN Central Bank Of Nigeria, Ecobank Nigeria Plc, First Bank of Nigeria Plc, Nigerian Stock Exchange, Skye Bank Plc, UBA United Bank for Africa, Union Bank Nigeria Plc, Zenith Bank Plc

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