Improved corporate earnings lift capitalisation by N719 billion

•Investors stake N51.2b in equities in one week

In alignment with the global equities rebound anticipation of improved third quarter (Q3) earnings and interim dividends from listed firms, especially banks’ stocks triggered bargain hunting at the end of last week’s transactions on the equities sector of the Nigerian Exchange Limited (NGX), as capitalisation rises by N719 billion, wiping away previous week’s losses.


Last week, positive momentum across key sectors in banking, consumer goods, and oil and gas spurred positive sentiments in equities, even as investors remain watchful of upcoming economic data releases and potential policy shifts. 


Precisely, the NGX-banking index was the lead gainer with 5.12 per cent price appreciation, propelled by an upturn in FBNHoldings, Ecobank Transnational Incorporated (ETI), Access Bank and Fidelity Bank while bargain hunting in Oando and Eterna led to 2.00 per cent weekly gains for the NGX oil & gas index. The insurance index, consumer goods and industrial goods indexes also appreciated by 1.59 per cent, 1.47 per cent and 0.17 per cent respectively.


Consequently, the NGX All-share index and market capitalisation appreciated by 1.06 per cent and 1.10 per cent to close the week at 97,456.62 and N56.002 trillion respectively.


Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said the current state of the NGX presents an opportunity to buy into undervalued and fairly valued companies as revealed by their half-year corporate numbers.


He expressed optimism that investors will take advantage of the low valuation in the market to buy into value and defensive stocks to support the rebound.


“We expect mixed sentiment to continue on profit-taking and bargain hunting in the hope of an inflow of the half-year numbers from the other interim dividend-paying stocks.


“Portfolio repositioning is however continuing, with investors taking advantage of pullbacks to buy into value. This is amid the volatility and pullbacks that add more strength to the upside potential.

“Consequently, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically,” he said.


Analysts at Cordros Capital anticipate mixed sentiments in the near term with investors focusing on bank stocks based on recent corporate actions.

“However, we acknowledge the possibility of profit-taking activities on stocks that have experienced notable appreciation in recent weeks.


“In the medium term, we expect investors’ sentiments to be shaped by developments in the macroeconomic landscape and the movement of yields in the fixed-income market.


Cowry Asset Management said: “As Nigeria’s macro landscape continues to evolve, the bourse is poised for further activity in reaction to the changing fundamentals and technicals even as we expect continued volatility and entry opportunities for savvy investors.


“Looking into the coming week, we expect positive sentiment to rule the local bourse in the coming week on portfolio rebalancing, and position taking in value-giving and fundamentally sound stocks given the relative strength of the market index trading above the T-line. Nevertheless, we will continue to advise investors to focus on fundamentally sound stocks.”


Further breakdown of last week’s activities showed that a turnover of 2.6 billion shares worth N51.2 billion was recorded in 50,615 deals by investors on the floor of the Exchange, in contrast to 2.1 billion units valued at N51.2 billion that was exchanged in 55,603 deals.


The financial services industry (measured by volume) led the activity chart with 1.7 billion shares valued at N26.9 billion traded in 19,277 deals; thus contributing 66 per cent to the total equity turnover volume. The oil and gas industry followed with 332.8 million shares worth N11.9 billion in 9,956 deals.

The services industry ranked third with a turnover of 146.1 million shares worth N530.5 million in 3,404 deals.
Trading in the top three equities namely Jaiz Bank Plc, Zenith Bank Plc and Japaul Gold & Ventures Plc (measured by volume) accounted for 947.8 million shares worth N11 billion in 4,822 deals, contributing 36.7 per cent to the total equity turnover volume.


Also, a total of 43,535 units of Exchange Traded Products (ETPs), valued at N13.5 million were traded in 122 deals compared to a total of 23,881 units worth N8.2 million transacted in 136 deals during the preceding week.


In addition, 197,343 units of bonds valued at N189.5 million were traded in 31 deals higher than the 21,002 units valued at N19.9 million that were exchanged in 24 deals during the preceding week.