Anxiety over earnings pushes indices up by N327 billion in July

Anticipation of improved half-year (H1) earnings and accompanied dividend declarations triggered bargain-hunting on the equities sector of the Nigerian Exchange Limited (NGX) last month, causing investors’ fortune to soar by N327 billion in one month.

Specifically, the market capitalisation, which reopened for the month of July at N19.756 trillion, rose by N327 billion to close on Friday, July 30, 2021, at N20.083 trillion.

Similarly, the All-share index, which measures the performance of, listed equities increased by 648.52 points or 1.7 per cent from 37,898.56 to 38,547.08.

Analysts linked the performance to bargain hunters’ positioning as profit-taking slow down amidst rekindled buying interests ahead of more scorecards.

According to them, despite the mixed trend so far in 2021, occasioned by the nation’s insecurity and other macroeconomic challenges, July witnessed sustained bulls’ dominance, making the stocks retain value, especially some of those that posted impressive half-year numbers.

The Chief Research Officer of Investdata Consulting, Ambrose Omordion said: “Half-year corporate scorecards have been surprising and impressive, although investors are still looking into the future to ascertain the possibility of continuity.

“A good number of listed companies on the NGX beat analysts’ projections. The most outstanding sectors in terms of half-year earnings performance are as follows: Agribusiness, Industrial Goods, Healthcare, Energy, Consumer good, Banking, and Insurance. This is a function of demand and supply, sentiments, and earnings which are the engine that drives prices in the short to long-run.”

Meanwhile, bargain hunters’ buying interest, particularly in the banking sector continued at the reopening of transactions for the month of August yesterday, as market capitalisation increased further by N30 billion.

Yesterday, the ASI grew by 57.64 absolute points, representing an increase of 0.15 per cent, to close at 38,604.72 points. Similarly, the overall market capitalisation value grew by N30 billion to close at N20.114 trillion.

The market’s positive performance was driven by price appreciation in large and medium capitalised stocks among which are; MTN Nigeria Communications (MTNN), Julius Berger, Unilever Nigeria, NASCON Allied Industries, and NPF Microfinance Bank.

Analysts at United Capital Plc “We expect to see a tight trading week as investors continue to take profits off the table while others consider decent entry prices into large-cap banking stocks that are yet to publish their H2, 2021 scorecards”.

However, activities on the price movement chart showed that 26 stocks declined while 17 recorded gains.

Julius Berger Nigeria recorded the highest price gain of 8.89 per cent to close at N24.50 kobo. NPF Microfinance Bank followed with a gain of eight per cent to close at N1.89 kobo while Regency Alliance Insurance went up by 7.14 per cent to close at 45 kobo.

Linkage Assurance rose by 6.67 per cent to close at 64 kobo while Mutual Benefits Assurance gained 5.41 per cent to close at 39 kobo.

On the other hand, Eterna led the losers’ chart by 10 per cent to close at N6.39 kobo. Neimeth International Pharmaceuticals followed with a decline of 9.71 per cent to close at N1.58 kobo. Triple Gee & Company lost 9.09 per cent to close at 90 kobo.

Dangote Sugar Refinery lost 5.41 per cent to close at N17.50, while Lafarge Africa shed 5.02 per cent to close at N21.75 kobo.

The total volume of trades fell by 36.9 per cent to 244.288 million units, valued at N1.908 billion, and exchanged in 4,609 deals. Transactions in the shares of Transnational Corporation of Nigeria (Transcorp) topped the activity chart with 40.263 million shares valued at N40.005 billion.

C&I Leasing followed with 26.097 million shares worth N12.261 million, while FCMB Group traded 17.715 million shares valued at N55.724 million.

Oando traded 11.761 million shares valued at N57.235 million, while Sovereign Trust Insurance transacted 8.215 million shares worth N2.188 million.