Equities market sustains sliding profile amid unstable economic outlook

Negative macroeconomic indices and unstable economic outlook depressed transactions on the equities sector of the Nigerian Stock Exchange (NSE), as the All-Share Index depreciated by 0.08 per cent to close the week at 25,572.57.

All other indices finished lower with the exception of NSE Main Board, NSE Pension, NSE Insurance, NSE Meri Growth, NSE Consumer Goods, NSE Lotus II and NSE Industrial Goods Index, which appreciated by 0.13 per cent, 0.06 per cent, 0.01 per cent, 0.17 per cent, 0.13 per cent, 0.19 per cent, and 0.50 per cent, respectively, while NSE ASeM Index closed flat.

At the end of trading last week, the market sustained a sliding profile for three consecutive trading days.

Analysts predicted that the mixed performance is likely to persist, as September progresses in the midst of profit-booking, mismatch of economic policies, and negative macroeconomic indices.

The Chief Research Officer, Investdata Consulting, Ambrose Omordion, said: “Capital waves in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation, negative Q2 GDP of 6.1 per cent, and unstable economic outlook for the rest of 2020.

“This is just as the government and its economic managers are going back and forth with mismatched policies and implementation. Since rising hyperinflation in the country would remain unchanged in the near future due to the economic reform policies emanating from the government and its policy makers, investors should be mindful of the on-going correction.”

He continued: “August consumer price index released Tuesday, by the National Bureau of Statistics (NBS), revealed a strong spike in inflation at 13.22 per cent from the previous month 12.82 per cent, reflecting the glaring impacts of the mismatch policies, high cost transportation, and the heightened insecurity that has affected farmers.

“This is besides the low produce resulting from climate change, and the incessant increase in fuel prices before the recent hike in the name of full deregulation and removal of subsidy on petrol.

“Focus should therefore be on companies likely to benefit from the on-going pandemic. When interest rates are low, stocks are typically seen as more attractive despite the high inflation that is threatening returns and yields,” he said.

Analysts at Codros Capital said: “In the absence of a positive catalyst, and given the still uninspiring macro story, we guide investors to trade cautiously in the short term.

“However, we expect the market might benefit over the longer term on compelling valuations, and as investors seek alpha-yielding opportunities in the face of negative real returns in the fixed income market.”

A breakdown of market performance during the week showed sustained bargain-hunting in most blue-chip stocks, as trading on the NSE reopened upbeat on Monday, causing the All-Share Index (ASI), to rise by 0.05 per cent.

At the close of transactions, the ASI increased by 13.64 absolute points or 0.05 per cent growth to close at 25,605.59 points. Similarly, the overall market capitalisation gained N7 billion to close at N13.358 trillion.

The upturn was impacted by gains recorded in large and medium capital stocks, including Chemical and Allied Products Plc (CAP), Dangote Cement, Lafarge Africa, Neimeth International Pharmaceuticals, and Guaranty Trust Bank.

Renewed profit-taking activities saw the market closed on a downturn, Tuesday, causing market capitalisation to plunge by N4 billion.

Precisely, the ASI shed 7.63 absolute points, or 0.03 per cent to close at 25,597.96 points. Similarly, market capitalisation fell to N13.354 trillion as investors lost N4 billion.

The downturn was impacted by losses recorded in large and medium capitalised stocks, such as SEPLAT Petroleum, Red Star Express, Dangote Sugar Refinery, Oando, and NPF Microfinance Bank.

Analysts at Afrinvest Limited said: “As investors trade the equities market cautiously, we expect to see a slightly bearish performance during the week as a result of sustained profit-taking.”

Market sentiment, as measured by the market breadth, was negative, as 13 stocks gained relative to 15 losers. Ikeja Hotel recorded the highest price gain of 9.52 per cent to close at 92 kobo per share.

Trading on the equities sector of the Nigerian Stock Exchange (NSE) closed on a downturn on Tuesday causing market capitalisation to plunge by N4 billion.

Precisely, the All-Share Index (ASI) decreased by 7.63 absolute points, representing a dip of 0.03 per cent to close at 25,597.96 points. Similarly, market capitalisation fell to N13.354 trillion as investors lost N4 billion.

The downturn was impacted by losses recorded in large and medium capitalised stocks, among which are: SEPLAT Petroleum Development Company (SEPLAT), Red Star Express, Dangote Sugar Refinery, Oando and NPF Microfinance Bank.

Analysts at Afrinvest Limited said: “As investors trade the equities market cautiously, we expect to see a slightly bearish performance during the week as a result of sustained profit-taking.”

Market sentiment, as measured by the market breadth, was negative, as 13 stocks gained relative to 15 losers. Ikeja Hotel recorded the highest price gain of 9.52 per cent, to close at 92 kobo, per share.

Persistent profit-taking in the shares of some blue-chip companies, on Wednesday, caused the ASI to depreciate further by 0.19 per cent or 47.65 absolute points, to close at 25,550.31 points. Accordingly, investors lost N1 billion in value as market capitalisation dropped to N13.353 trillion.

The downturn was impacted by losses recorded in medium and large capitalised stocks, including Cadbury Nigeria, Lafarge Africa, NEM Insurance, Zenith Bank, and International Breweries.

Further review of market performance showed a turnover of 1.139 billion shares worth N12.692 billion recorded in 17,109 deals by investors in contrast to a total of 1.226 billion units valued at N10.842 billion exchanged in 19,529 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 870.300 million shares at N7.863 billion traded in 9,427 deals; thus contributing 76.43 per cent to the total equity turnover volume.

The industrial goods industry followed with 62.689 million shares worth N1.162 billion in 1,557 deals. The third place was the ICT industry with a turnover of 50.859 million shares at N2.552 billion in 619 deals.

Trading in top three equities namely FBN Holdings Plc, Guaranty Trust Bank Plc, and Access Bank Plc. (measured by volume) accounted for 353.048 million shares worth N4.018 billion in 3,095 deals, contributing 31.00 per cent to the total equity turnover.

About 32 equities appreciated in price during the week, higher than 23 in the previous week. Also, 31 equities depreciated in price, lower than 38 equities during the period, while 100 equities remained unchanged, lower than the 102 recorded in the previous week.