The Namibia Stock Exchange’s (NSX) local index experienced a significant downturn in the second quarter of 2024, with turnover plummeting by 77% to N$92.3 million.
According to recent data by the First National Bank of Namibia, the sharp decline marks a substantial drop compared to the previous quarter and the same period in 2023.
According to the First National Bank of Namibia’s second quarter review, the local index returned a modest 2.54% during the quarter but reduced in comparison to the overall NSX index.
The overall NSX surged by 19.34% buoyed by a strong rally in the South African market following the formation of the Government of National Unity and a bid for Anglo American by BHP Billiton.
“The NSX local index cooled down following its bull run in 2023. The local index returned 2.54% over the second quarter of 2024. This is significantly lower than the NSX overall index, which managed to edge out a 19.34% return following a strong rally in the South African market post the Government of National Unity announcement,” the report reads.
Despite the overall market weakness dual-listed stocks, primarily Anglo American (N$428 million), Nedbank Group (N$249 million), and Standard Bank Group (N$148.7 million), accounted for a substantial portion of trading activity, totalling N$1.6 billion.
The report further said although MTC’s revenue and profit outlook is positive due to the improved civil servant wage adjustment, interim earnings decreased by 6.4% owing to a one-time payment to CRAN.
“The company only paid dividends at the lower bound of their dividend policy as management prioritises capital expenditure projects. Another important point to consider is that staff costs are relatively high and pose a significant headwind to future dividends,” it says.
Furthermore, Oryx Properties, another potential beneficiary of the wage adjustment, has seen limited share price movement. Letshego Namibia (LHN), however, has been a standout performer, benefiting from its exposure to government employees. LHN boasts the highest dividend yield at 15.5%.
“LHN also continued to pay out 100% of their earnings and currently boasts the highest dividend yield across all primary-listed stocks at 15.5%,” it is reported.
The report stated that the banking sector has attracted investor interest. FNB was the most traded primary-listed stock with N$22.5 million in turnover, although its interim results showed a 1.1% decline in profit after tax.
Capricorn Group, while recording lower turnover, reached an all-time high with a 13.9% increase over the first half. Standard Bank Namibia has seen limited price movement after a strong 2023.
On the other hand, Standard Bank Holdings delivered robust yearly results with a 23.85% increase in earnings per share and a dividend yield of 11.8%. The bank’s ability to manage deposits and its funding base has been instrumental in its success.
“The board’s dividend payout ratio increased to 68.2% from 55.3%, implying a dividend yield of 11.8%. A significant driver of the bank’s performance is its ability to manage deposits and its funding base. The bank increased call deposits and reduced its NCDs,” it reads.
The civil servant wage adjustment is expected to be a tailwind for Namibian banks, providing relief to consumers and enabling increased credit extension.
Furthermore, Namibian bonds have performed impressively, with the IJG ALBI returning 9.90%. This was largely due to a significant contraction in Namibian spreads and a decline in South African yields.
