Online Nigerian Capital Market Watch: 2011

Friday, November 18, 2011

What is Bond Yield Curve?

This week we discuss the Bond Yield Curve.

In finance, the yield curve is the relation between the (level of) interest rate (or cost of borrowing) and the time to maturity, known as the "term", of the debt for a given borrower in a given currency. For example, the Nigeria naira interest rates paid on FGN Treasury securities for various maturities are closely watched by many traders,

NSE Market Review [26-30 Sept]

The markets current mood could be many things to different people. To the bears it could be vindication. To the bulls it could be a gold mine with tremendous upside. To the team at Applied Logic it is content that needs structure to guide the many opinions that are developing on this market.

Last week we discussed the bond current yield, this week we discuss what it means for Bonds to trade at a Premium or Discount.

Par value is the issue price of a bond. Par value for FGN bonds is N100 BroadStreetLagos.Com/Bond-Screener/Par. Once a bond is traded on the open market it becomes subceptible to market perceptions, demand and supply. The result is a bond price can either drop below par value (trading at a discount BroadStreetLagos.Com/Bond-Screener/Discount) or move above it (trading at a premium BroadStreetLagos.Com/Bond-Screener/Premium). These moves have implications for current yields and yields to maturity.

The market appears to have settled into a trading pattern below 21,000 with signs of breaching 20,000 imminent. An excellent place for bargain hunters.
The NSE is considering reducing the minimum volume required to move prices from 50,000 shares to 10,000 shares.

Bond Yield to Maturity

Previously week we discussed the bond current yield, this week it is the Bond Yield to Maturity

As a premium subscriber you have access to a feature that makes it easy to search for current bond yields to maturity.

The yield to maturity (YTM) is a combination of the return or loss on par value plus the coupon. Bonds selling at a discount to par tend to have higher yields than their peers, while the yields of those selling at a premium tend to be lower. However depending on the coupon and timing of entry these metrics will be varied.

There isn’t a stronger signal of this markets search for direction than its sharp reversal on September 14, 2011 after it tiptoed towards 21,000.
With the dividend yield above 8% and the 10 year bond yield below 10%, this market is clearly ripe for accumulation. The spread between these two product types is less than 1.7%, its narrowest since the last visit to 21,000. In the early days of the correction, this metric was as wide as 7% at the markets lowest point.

Premium subscribers have access to a feature that makes it easy for you to search for current bond yields.

The current yield is the interest payment divided by the current price of the bond. A bond with a price below par will have a yield that is higher than its coupon and vice versa.

You can easily search for these using the bond screening tool. This is useful in the current environment of low interest rates in the money markets. Investing in a bond fund will be advisable as they are able to participate in huge volumes at low transactions costs.

With the NSE-ASI closing 0.50% shy of 21,000 last week, a dip below this key resistance point appears imminent. In this sort of scenaro, heavy volumes would signal mass exits, however this does not appear to be the case pointing to cautious accumulation.

At times like this it is always useful to get a little historical encouragement, volumes today are 15x what they were in 2001. In 2006 they were 5x what they were in 2001.

BroadStreetLagos.Com will be one of the media partners for Africa Investor's (AIs) Index Series awards at the New York Stock Exchange on September 26, 2011. If you are coming look out for our publications.

Africa Investor (Ai) supplies a broad range of investment data, research, broadcast and published content to a growing number of investors with interests in Africa. Africa investor Group provides strategic research, indices, communications and investment publishing services to support its clients investment and communication programmes.

Through its sister organization, African Investment Advisory the group also provides project advisory services. Operating at the intersect of business, government, international organizations and the media, Africa investor group has a growing network of clients across Africa serviced from regional hub offices in Nairobi, Lagos and Johannesburg, affiliate offices across the continent and a coordinating office in London.

The market continued its slide this week with a slight uptick on only Friday. Trading may have been limited by the 2 day sala holiday. However, with the confluence of negative events: bombing of the UN by Boko Haram, nationalization of banks, etc its is difficult to identify the common cause for the markets current mood.
Clearly, it represents a great buying opportunity, fundamentalists, value investors and contrarians will say. The PE Ratio as computed by BSL hovers around 25 for the first time in 3 years, the dividend yield appears to prefer an +8% bias.

The company was incorporated as a limited liability company on 26 June, 1974 and became a public quoted company in February, 1986. The Company engages in the manufacture of bottles and glassware.

To view information on;

key executives, go to BroadStreetLagos.com/BG

Performance Indicators, go to BroadStreetLagos.Com/BG-PI

A premium profile on BroadStreetLagos.com gives you access to the data you need. Over the next few weeks we will discuss more indicators, phrases and companies.

NSE Market Review[22-26 Aug]

This week the NSE-ASI breached 22,000 for the first time since January 14, 2010 (20 months ago). The next resistance point is 21,000 (which was last breached on January 5, 2010). Both occurred within 9 days of each other with the market scaling 25,000 3 months later.

It will be interesting if recent history repeats itself. While we seek evidence of a stronger reversal it is important to focus on the benefits of the markets move to lower lows.

Enterprise value (EV), Total enterprise value (TEV), or Firm value (FV) is an economic measure reflecting the market value of a whole business. It is a sum of claims of all the security-holders: debt-holders, preferred shareholders, minority shareholders, common equity holders, and others. Enterprise value is one of the fundamental metrics used in business valuation, financial modeling, accounting, portfolio analysis, etc. EV is more comprehensive than market capitalization (market cap), which only includes common equity.

The market appears to be crawling back after its dip below 23,000, a key resistance point. It seems to have overcome its disappointment in the nationalization of three listed banks.

It is important to note that the last time the market dipped below 23,000 was September 29, 2010 (10 months ago). How the market behaves in this delicate range is anybody's guess. Its other two resistance points are 21,000 and 20,000 and clearly should be in the rear view mirror of any close watchers. Prices appear numb to positive reports of company fundamentals as Government and regulator policy actions appear to weigh more on the market.

Nationalization,
also spelled nationalization, is
the process of taking an industry or assets into the public
ownership of a national government or
state.

Nationalization usually refers to private assets, but
may also mean assets owned by lower levels of government, such as municipalities, being transferred to the public
sector to be operated by or owned by
the state. 

The opposite of nationalization is usually privatization or de-nationalization, but may also be municipalization. There isn't a better time to "bottom-fish"
this market. However, the tools you need are available only through a premium
profile on BroadStreetLagos.com .

Call
me on +234708 319 0283 to find out how to change to a
premium profile. 

NSE Market Review [8-12 Aug]

Last
week’s nationalization of three listed banks seemed to be the push this
market had been ignoring. A market that had been on edge for some
time briefly appeared to be tottering. It may have been emotional but
certainly not irrational. 

It appeared to show its discontent with the
nationalization during the first three days of trading, the NSE-ASI dropped
some 1,061 points (-4.53%). It then reversed its path in the last two
days appearing to pick up the pieces from what may have been an
overreation.

Focus Indicator:NSE-ASI

The NSE-ASI stands for the Nigeria Stock Exchange All Share Index. It is the most widely followed barometer on the Nigeria Stock Market. Although other indexes have been created, the NSE-ASI is the most closely followed for investors seeking to guage the markets mood or temperature.

The market's mood appears cautious but anticipatory. Caution, as the aftershocks of the banking crisis, the markets meltdown and governance issues at corporate level can still be felt. Anticipatory, as the new leadership at the Ministry of Finance is expected to provide common direction to the financial markets. Recently Nigeria Eurobond yields were reported to have dropped in anticipation of this new leadership.

The company was incorporated in Nigeria as a private limited liability company on 11th December, 1964 and became a listed company in 1978. The shares are quoted on the Nigerian Stock Exchange. The company and its subsidiaries are mainly into Agricultural developments activities such as cotton cultivation, cotton ginning, manufacturing of edible oil and the supply of Agricultural inputs to farmers and government agencies.

It might be too early to give up on this market. Although higher highs are preferred, the current move to lower lows for the NSE-ASI is not strange. There appear to be four resistance points in the markets near term trading pattern; 25,000 (which has been breached); 23,000; 21,000 and 20,000.

Studio Press is involved in lithographic printing and manufacturing of cartons, light packaging materials like labels and flexo printing such as nylons and poly wrappers.The company was incorporated on 9th July, 1965 under the name of Studio Press (Nigeria) Limited and converted to a public company in 1979.

Company Focus: Guinness

The Company's principal activities continue to be brewing, packaging and marketing of Guiness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Harp Lager Beer, Gordons Spark, Smirnoff Ice, Satzenbrau and Top Malt. To view its 1 year price chart visit http://69.64.64.114/~broad2/compDetail.php?s=GUI&p=cbc&dd=1Y

A premium profile on www.broadstreetlagos.com gives you access to the data you need. Over the next few weeks we will discuss more phrases.

NSE-Market Review [11-15 Jul.2011]

The market continued its downward trend last week, with an uptick on only one day - however Friday this time rather than Thursday. The NSE-ASI closed at 23,832.14 -0.0157% (-0.015% in the previous week). Volume for the week was a cumulative 0.938 billion shares (1.685 billion shares in the previous week). The turbulence in this new market needs proactive attention.

A premium profile on www.broadstreetlagos.com gives you access to the data you need. Over the next few weeks we will discuss more indicators.

Wednesday, July 13, 2011

Company Focus:Neimeth International Pharmaceuticals Plc

The Company was incorporated on 30th August 1957 as a Private Limited Liabilty Company. It was converted to a Public Limited Liability Company in 1991 and the shares are currently quoted on the Nigerian Stock Exchange. On 14th May 1997, Pfizer Inc. N.Y. divested from the company through a management buy-out.

A company's capitalization refers to the total Naira market value of all of a company's outstanding shares. Capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.

Capitalization Explained
If a company has 35 million shares outstanding,

NSE-Market Review[4-8 Jul,2011]

Suspension of 41 companies by the NSE for not submitting annual reports. The NSE-ASI closed at 24,310.03 -0.015% ,Volume for the week was a cumulative 1.685 billion shares

Although, former Minister of Finance and World Bank Managing Director, Dr Okonjo-Iweala was confirmed by the Senate to be a Minister in the new Jonathan administration, the market continued its downward drift. It appeared to mirror last weeks trading pattern with an uptick on Thursday only to reverse the next day, same as last week.

SEC Commences Implementation of Margin Guidelines

The Securities and Exchange Commission (SEC) has kicked off the implementation of margin guidelines for the Nigerian stock market, with a training programme.

The training- a three-day workshop, was part of its effort to build capacity of its staff to address issues relating to margin trading and finance, and develop an in-house application to generate the “margin list”.

NSE MARKET REVIEW [28 mar- 1Apr, 2011]

There is no week without event in this market. This particular week is special as it had the privilege to host the end of the 1st quarter of 2011. It also launches the month that will see the NSE with a new CEO and Nigeria elect its new leadership that will take over on May 29, 2011.

Access Bank plc was incorporated as a limited liability company on 8 February 1989 and commenced business on 11 May 1989. It was converted to a public limited liability company on 24 March 1998 and its shares were listed on the Nigerian Stock Exchange on 18 November 1998. The bank was issued a universal banking license by the Central Bank of Nigeria on 5 February, 2001.

A bond is simply a type of loan taken out by companies, or a government. Investors lend a company money when they buy its bonds.

Coupon: This is the amount of interest due and the date on which payment is to be made. Where the coupon is blank, it can indicate that the bond can be a “zero-coupon,” a new issue, or that it is a variable-rate bond. The amount of interest paid to an investor (i.e. coupon payment) is calculated by multiplying the interest of the bond by its face value (i.e. The par value of a security, as distinct from its market value).

NSE_ASI Market Review[21-25 Mar. 2011]

The NSE-ASI closed at 24,863.38 +1.98% (-4.7% in the previous week). Volume for the week was a cumulative 1.162 billion shares (1.102 billion shares in the previous week)

If you focused on the fact that the NSE-ASI barely brushed 25,000 and retreated, you might miss that the market was up for the week. The NSE-ASI closed at 24,863.38 +1.98% (-4.7% in the previous week). Volume for the week was a cumulative 1.162 billion shares (1.102 billion shares in the previous week).

A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share. Also known as the "price-equity ratio".

Calculated as:

A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware that this varies by industry.

Forte Oil PLC formerly known as African Petroleum plc was incorporated on 11 December 1964. The Company is engaged in the marketing of petroleum products which is directed at four main market segments namely the automobile, industrial, aviation and marine markets. In addition, the company operates a lubricating oil blending plant.

What is Profit Margin?

Net profit divided by net revenues, often expressed as a percentage. This number is an indication of how effective a company is at cost control. The higher the net profit margin is, the more effective the company is at converting revenue into actual profit. The net profit margin is a good way of comparing companies in the same industry, since such companies are generally subject to similar business conditions.

NSE Market Review [14-18 mar, 2011]

"The NSE-ASI closed at 24,378.72-4.7% (+0.9% in the previous week). Volume for the week was a cumulative 1.102 billion shares (1.91 billion shares in the previous week)"

Despite the NSE-ASI being down -4.7% this week there are a few key milestones to note. The week saw the highest number of transactions in a single day for the year at 12,424 on March 15, 2011. It was also interesting that the only positive day in the week was also the same day the presidential debates were held.

Glaxo Smithkline Consumer PLC was incorporated in 1971. The shares of the company are held 46.4% by GlaxoSmithKline plc UK through its wholly owned subsidiaries, Setfirst limited and Smithkline Beecham Limited (both incorporated in the UK); and 53.6% by Nigerian shareholders.

What are Unit Trusts?

A unit trust is a form of collective investment constituted under a trust deed. Unit trusts represent the pooled resources of thousands of investors who have entrusted their money to a management company.

The management company buys shares on the Stock Exchange on behalf of the investors. The trust does not give the shares to the investor, but combines them in a portfolio.

ABC Transport was incorporated as a private Limited Liability company on April 5, 1993 and was converted to a Public Limited Liability Company on November, 21 2005. The shares were quoted on the Nigerian Stock Exchange on December 20, 2006.

While some might celebrate last week’s belated/tepid recovery they might be missing the messages in the numbers. Before the retraction, the market sustained a 10 day losing streak of 1,572 pts. The equivalent of over 150 pts per day. Even with the reversal, the NSE-ASI is still down over 1,000 pts from its peak.

What is Passive Investing?

Passive Investing (also called passive management) is a financial strategy in which an investor (or a fund manager) invests in accordance with a pre-determined strategy that doesn't entail any forecasting (e.g., any use of market timing or stock picking would not qualify as passive management). The idea is to minimize investing fees and to avoid the adverse consequences of failing to correctly anticipate the future. The most popular method is to mimic the performance of an externally specified index.

The market was red all of this week seeing the NSE-ASI dip below 26,000 for the second time this year on the first day of a new month. This defeats the thesis that 26,000 is a floor for this cycle. However, consistent with the tone of the market in the last 6 months, there is ample reason to believe that a retraction will be swift.

What Does Debt/Equity Ratio Mean?

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the calculation.

Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal financial statements as well as corporate ones.

Nigerian-German Chemicals PLC was incorporated as a private limited liability company on January 10, 1964 and became a public limited liability company, quoted on the Nigerian Stock Exchange in August 1979. The company is engaged in the manufacture, marketing and distribution of pharmaceutical healthcare products, household consumer products, as well as oil-field chemicals.
Website:http://www.ngcplc.com/

It seemed odd that on the same day Businessday held its annual capital markets conference, the market saw its second biggest point loss for the year at -496.45, It could be that with DG SEC, DG NSE and major players in the market occupied by the conference, the bears felt confident to make a reappearance. Next week’s market direction will give us an idea of whether this hypothesis has credence or not.

The NSE-ASI closed at 26,639.35 -0.17% (-0.3% in the previous week) [14-18 Feb. 2011]

It was "V' Shaped week for the NSE-ASI http://broadstreetlagos.com/asiDetail.php?p=cbc&dd=5D. Again volume for the week remained below 2 billion, following a declining trend in the last few weeks. This appears to be more confirmation that 26,000 maybe a consolidation point, at least till the end of the first quarter.The market could be waiting for a significant change.

Cadbury Nigeria PLC was incorporated on 9 January, 1965. Cadbury Nigeria Plc is principally engaged in the manufacture and sale of branded fast moving consumer goods mostly to the Nigerian market, but increasingly for exports as well.

What is Equity?

Ownership interest in a corporation in the form of common stock or preferred stock. It also refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value.

In the context of a futures trading account, it is the value of the securities in the account, assuming that the account is liquidated at the going price.

Seven-up is listed in the Food and Beverages Sector of the NSE. The company was incorporated as private limited liability company on 25th June 1959 under the name Seven-Up Ltd. On 16th May, 1960, the name was changed to Seven-Up Bottling Company Ltd. and in 1978 it became a Public Company.

The NSE-ASI closed at 26,684.49-.0.3% (-2.2%in the previous week) with a cumulative volume of 1.31 billion shares [7-11 Feb, 2011]

Another choppy week leaves the NSE-ASI essentially flat. Volume for the week remained below 2 billion, following last week’s trend. The choppy nature seems to confirm last week’s observation that 26,000 maybe a consolidation point, at least till the end of the first quarter.

What is Index Arbitrage?

Index arbitrage is a subset of statistical arbitrage focusing on index components. The idea is that an index (such as S&P 500 or NSE-ASI) is made up of several components (in the example, the Top 500 US biggest firms by market capitalization) that influence the index price in a different manner. For instance, there are leaders (components that react first to market impact) and laggers (the opposite).

It was a choppy week without a doubt, as the NSE-ASI finally dipped below 27,000. Volume for the week also dropped below 2 billion for the first time this year. If you look at the NSE-ASIs 3 month chart there may be ample reason to believe that 26,000 is the floor for this trading cycle, at least till the end of the first quarter.

What is a Stock Market Index??

A stock market index is a method of measuring a section of the stock market. Many indices are cited by news or financial services firms and are used as benchmarks, to measure the performance of portfolios such as mutual funds. An index may also be classified according to the method used to determine its price.

This week the market confirmed its current infatuation with 27,000. For 9 trading sessions the NSE-ASI has remained above 27,000 without an apparent interest in breaching it either at the high or low end. The NSE-ASI closed at 27,356.59 -.012% (+1.5%in the previous week).

Who is a Broker-Dealer

A broker-dealer is a company or other organization that trades securities for its own account or on behalf of its customers. Although many broker-dealers are "independent" firms solely involved in broker-dealer services, many others are

To give you a little historical perspective in 2001 the NSE traded 6 billion shares for the full year. In the first three weeks of this New Year we have already exceeded that number at 7.9 billion shares. Unfortunately the positive tone of the market was dulled by the suspension of 57 broker/dealers for not meeting the minimum capital requirement of N70m.

Born in 1957 in the oil-rich Niger Delta region, Dr Goodluck Jonathan is a Christian from the Ijaw ethnic group. His family's trade was canoe-making, but he studied zoology at university. He worked as an education inspector, lecturer and environmental protection officer before going into politics in 1998.

BSL Sites

Friday, November 18, 2011

Tuesday, September 20, 2011

Thursday, September 15, 2011

Wednesday, July 20, 2011

Wednesday, July 13, 2011

Tuesday, June 7, 2011

Thursday, April 7, 2011

Friday, April 1, 2011

Wednesday, March 23, 2011

Thursday, March 17, 2011

Thursday, March 10, 2011

Wednesday, March 2, 2011

Wednesday, February 23, 2011

Friday, February 18, 2011

Thursday, February 17, 2011

Tuesday, February 8, 2011

Wednesday, February 2, 2011