Anticipated Q3 earnings, dividends raise index by 1.62%

Ahead of the third quarter (Q3) earnings and accompanied dividend declarations, bargain hunting in tier-one banks, including FBN Holdings Plc and Ecobank Transnational Incorporated PLC buoyed transactions on the equities sector of the Nigerian Exchange Limited (NGX) last week, as the All-Share Index and market capitalisation appreciated by 1.61 per cent and 1.62 per cent to close the week at 40,868.36 and N21.296 trillion respectively.

Also, all other indices finished higher except NGX insurance and NGX consumer goods indices that shed 1.51per cent and 0.51.per cent respectively, while the NGX ASeM, NGX Growth and NGX Sovereign bond Indices closed flat.

Analysts said the five consecutive days rally and increasing buying interest across the sectors signaled a gradual return of investors’ confidence as funds flowed into equities assets with investors hedging against inflation, regardless of the decline recorded in the last five months.

On how sustainable is the rally, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said: “We should expect a slight pullback on profit-taking this week or next week before the Q3 numbers starting hitting the market.

“The state of the expected earnings reports and level of liquidity in the equity space will determine the possibility of another rally in the new month and quarter.”

Analysts at Cordros Capital also said: “In the week ahead, we do not expect the bulls to repeat the flawless victory that pervaded the local bourse this week as the bears are likely to book profit across most counters. “Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”

Last week, a total turnover of 2.179 billion shares worth N21.9 billion was recorded in 22,438 deals by investors on the floor of the exchange.

This volume of shares was however higher than a total of 2.187 billion units worth N16.1 billion that changed hands during the preceding week in 14,377 deals.

The financial services industry (measured by volume) led the activity chart with 1.77 billion shares valued at N18.058 billion traded in 12,942 deals; thus contributing 81.2 per cent to the total equity turnover volume.

The conglomerates followed with 93.178 million shares worth N169.819 million in 736 deals. Similarly, the ICT industry ranked third with a turnover of 72.338 million shares worth N1 billion in 861 deals.

Trading in the top three equities namely FBN Holdings Plc, Universal Insurance Plc and Fidelity Bank Plc (measured by volume) accounted for 1.161 billion shares worth N12.338 billion in 3,460 deals, contributing 53.28 per cent to the total equity turnover

Also, a total of 260 units of Exchange Traded Products (ETPs), valued at N5,362.50 were traded in two deals compared with a total of 160,433 units valued at N52.347 transacted last week in 23 deals.

Similarly, 62,005 units of bonds valued at N65.842 million were exchanged in 39 deals compared with a total of 41,267 units valued at N42.568.

Four equities appreciated during the week, higher than 33 equities in the previous week. 26 equities depreciated, higher than 22 equities in the previous 87 equities remained unchanged lower than 100 equities recorded in the previous week.