By Peter Egwuatu and Providence Obuh
Activities on the Nigerian Stock Exchange (NSE) last week, continued on an impressive note, following  the N1.04 trillion non- performing loans purchased from Banks by the Asset Management Company of Nigeria (AMCON).

Equities value represented by the market capitalisation appreciated by N350.57 billion or 4.19 per cent to close at N8.711 trillion from N8.360 trillion at which it opened penultimate week  Another key performance indices, the All share index surged by 1,097.31 bases points or 4.19 per cent to close at 27,267.17 points from 26,169.86 points.

At the wake of the week , the performance indices,  the market capitalisation and the All share index dropped by 0.64 per cent, to close at N8.306 trillion from 8.360 trillion at which it open and to close at 25,998.64 26 points from 26,169.86 points at which it opened respectively.

Market Turnover
A turnover of 3.14 billion shares valued N26.24 billion in 37,691 deals was recorded, while transaction appreciated by 49.11 per cent in the week under review, in contrast to a total of 2.12 billion shares valued at N22.445 billion exchanged last week in 26,018 deals.

There were no transactions in the Federal Government Development Stocks, State Government Bonds and Industrial Loans/Preference Stocks sectors.

The Banking sub-sector was the most active during the week accounting for 72.29 per cent (measured by turnover volume); with 2.27 billion shares valued N20.77 billion exchanged by investors in 23,486 deals. Volume in the Banking sub-sector was largely driven by activity in the shares of Zenith Bank Plc trading 711.50 million shares valued at N11.26 billion in 2,656 deals, FinBank Plc followed in the sub-sector trading 226.04 million shares valued at N191.68 million in 570 deals and Oceanic Bank Plc recorded 144.51 million shares valued at N456.43 million in 1,463 deals.

The Insurance sub-sector followed on the week’s activity chart accounting for 10.80 per cent,  with a turnover of 339 million shares valued at N228.42million in 1794 deals. Last week,  African Alliance Insurance Company Plc dominated activities in the sub-sector trading 203.90 million shares valued at N101.95 million in seven deals, AIICO Insurance Company Plc followed with the exchange of 35.40 million shares valued at N33.34 million in 888 deals and NEM Insurance Company Nigeria Plc recorded 17.01 million shares valued at N9.88 million in 185 deals.

Market analysts view
Stock market analysts have attributed the recent recovery by investors to the purchase of non performing loans of some banks by AMCON.

Specifically, Union Bank, one of the rescued banks from the Central Bank of Nigeria (CBN) got a total of N239billion from AMCON as the first phase of  injection from the corporation following the purchase of some of the bank’s toxic assets.

Following the loan purchase agreement signed by the Asset Management Corporation of Nigeria and 21 banks, the corporation has injected N239billion  into Union Bank of Nigeria in the first phase of its bad loan purchase.

The Managing Director and Chief Executive, Union Bank, Mrs. Olufunke Osibodu, revealed the amount in a statement, saying “ in line with CBN directive to recapitalise the bank, Union Bank has secured  a preferred core investor and a standby core investor had been identified” , adding that the only reason why the identity of the core investor had not been officially declared was because the deal was still at the negotiating stage.

According to her one of the conditions to both core investors and existing shareholders is that we must take the bank from a negative capital level to zero level, and the partner in that project is AMCON. There are two phases of AMCON’s acquisition of bad loan. For the first part, we got the largest amount of cash from AMCON.”

Another bank that has benefitted from AMCON is Oceanic International Bank Plc which got   bonds worth over N200 billion in exchange for its non-performing loans.

Other banks that have benefitted from AMCON include: Intercontinental Bank Plc,N146 billion and  Wema Bank Plc N15.2 billion

Analysts further stated that Stanbic IBTC Bank has the best price performance (19.6%) among the twelve listed banks that did not receive any form of sanction or reprimand from the Central Bank in 2009 as of January 13th, 2011.  It is interesting to point out that Stanbic IBTC Bank is the only listed bank to decline participation in the purchase of its non-performing loans by the Asset Management Company of Nigeria (AMCON).

The opting out of participating in the AMCON deal appears to have sent the right signal to investors.  The interest in Nigerian banks at this time is largely from expectations of a quick and drastic turnaround in the banks’ financial performance preempting a bull run and not fundamental undervaluation across the board.  The market is clearly giving an edge to the only listed bank that declined to be part of the AMCON deal in comparison to other listed non-sanctioned or reprimanded banks.

According to analysts the eight banks with the best price performance for the first eight trading days of 2011 are all banks that were sanctioned or reprimanded in 2009 by the Central Bank. (Afribank, Intercontinental Bank, Spring Bank, Fin Bank, Oceanic Bank, Bank PHB, Union and Unity Bank.)  This shows that a good chunk of investors see the most upside in the banks that have had the most setback in their businesses and have had the most negative price performances relative to 2008 levels and expect AMCON’s intervention to provide its greatest and immediate impact to the financial performance of these sanctioned or reprimanded banks.

Price Movement
The NSE All-Share Index appreciated by 1,097.31 points or 4.14% to close on Friday at 27,267.17 while the market capitalization of the 201 First -Tier equities increased to N8.71 trillion. The NSE-30 Index appreciated by 55.38 points or 4.8 points to close at 1,202.64.

Last week, ASI and NSE-30 Index appreciated by 5.59 per cent and 6 per cent, respectively.  All the four sectorial indices appreciated during the week, same as in the preceding week. The NSE Food/Beverage Index appreciated by 17.63 points or 2.2 per cent to close at 820.76, the NSE Banking Index appreciated by 18.67 points or 4.30 per cent to close at 449.07, the NSE Insurance Index appreciated by 6.86 points or 3.91 per cent to close at 181.43 and the NSE Oil andGas Index appreciated by 13.11 points or 3.66 per cent to close at 369.88.

Top 10 gainers and losers
However, 64 stocks appreciated in price during the week, lower than the 68 of the preceding week. Nestle Nigeria Plc led on the gainers’ table with a gain of N19.00 or 4.93 per cent to close at N404.00 per share while Nigeria Breweries Plc followed with a gain of N8.43 or 10.2 per cent to close at N91.43 per share and Oando Plc garnered 5.97 or 8.2 per cent to close at N78.97 per share .

Other share price gainers’ include: Flour Mills of Nigeria Plc N4.50 or 6.3 per cent,  Dangote Cement Plc N3.52 or 2.8 per cent,  Larfarge Cement WAPCO Nigeria Plc N1.89 or 4.62 per cent, Nigeria Bottling Company Plc N1.72 or 4.91per cent, UAC of Nigeria Plc N1.70 or 4.45 per cent, Stanbic IBTC Bank Plc N1.52 or 15.8 per cent, Ashaka Cement Plc N1.45 or 5.3 per cent, among others.

Cadbury Nigeria Plc led 25 other stocks on the losers’ table during the week, higher than the 20 of the preceding week, dropping by N1.95 or 6.72 per cent  to close at N27.05 per share, John Holt Plc followed with a loss of N0.44 or 5 per cent  to close at N8.38 per share and Skye Bank Plc dipped by  0.37 or 3.64 per cent.

Other share price losers include: International Breweries Plc 0.31or 5per cent, C and I Leasing Plc 0.24 or 14.63 per cent, AG Leventis Nigeria Plc 0.24 or 9.45 per cent, The Okomu Oil Palm Plc 0.21 or 1.42 per cent, Prestige Assurance Company Plc 0.19 or 8.3 per cent,

First City Monument Bank Plc N0.18 or 2.2 per cent, Nampak Nigeria Plc N0.17 or 4.23 per cent.