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Improved corporate earnings lift stock indices

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For the first time since January, the Nigerian equities market closed higher for three consecutive weeks, as positive sentiments on the on-going half-year earnings season has continued to influence prices of low, medium and high cap stocks.

The development also caused the All-share index and market capitalisation to appreciate by 0.63 per cent to close the week at 25,199.84 and N13.146 trillion, respectively.

All other indices finished higher with the exception of NSE 30, NSE Premium, NSE Banking, NSE AFR Div Yield, NSE MERI Value, NSE Lotus and NSE Industrial Goods Indices which depreciated by 0.31 per cent, 1.27 per cent, 0.03 per cent, 0.07, 0.01, 0.70 per cent, and 2.71 per cent.

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Analysts also attributed the rise in indices to realignment of portfolios by market players ahead of macroeconomic data and corporate earnings of first-tier banks.

In addition, there was also the influence of more March year-end financials, even as companies that were seemingly hopeless to their shareholders suddenly posted positive numbers.

A review of market performance last week, showed that renewed profit-taking in the shares of some blue-chip companies, especially Champion Breweries, and Honeywell Flour Mill dragged the All-share Index (ASI) by 0.06 per cent on Monday.

The ASI fell by 14.28 absolute points, a 0.06 per cent dip to close at 25,027.61 points. Similarly, the overall market capitalisation shed N7 billion to close at N13.056 trillion.

The downturn was impacted by losses recorded in large and medium capital stocks, including BUA Cement, UAC of Nigeria (UACN), Ecobank Transnational Incorporated (ETI), Zenith Bank, and United Bank for Africa (UBA).

Analysts at United Capital Plc were not surprised, saying: “We expect to see some profit-taking activities given the bullish performance in the last two weeks.

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“However, we expect investors to position for the possibility of interim dividend announcements by tier-one banks who are yet to publish their financial results.”

Also, analysts at Afrinvest Limited expected mixed performance this week, as investors may take profit following last week’s bullish run.
Following sustained profit-taking in bellwether stocks, the Nigeria Stock Exchange (NSE), continued on a bearish note on Tuesday, as the ASI slipped further by 0.58 per cent.

The ASI fell by 143.91 absolute points, representing a contraction of 0.58 per cent to close at 24,833.70 points. Similarly, the overall market capitalisation shed N75 billion to close at N12.981 trillion.

The downturn was impacted by losses recorded in large and medium capitalised stocks, including Dangote Cement, Guinness Nigeria, AXA Mansard Insurance, Ikeja Hotel, and United Capital.

The Nigerian equities market closed upbeat on Wednesday, occasioned by gains in most blue-chip stocks, as investors gained N134 billion.
Specifically, the ASI rose by 257.78 absolute points or 1.04 per cent to close at 25,141.48 points. Similarly, the market capitalisation gained N134 billion to close at N13.115 trillion.

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The upturn was impacted by gains recorded in medium and large value stocks, including Seplat Petroleum, Airtel Africa, Presco, Okomu Oil, and Guinness Nigeria.

The Chief Operating Officer, InvestData Consulting Limited, Ambrose Omordion, said: “Investors and traders are positioning in anticipation of interim dividends pay-out, amid the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.

“We see investors focusing on portfolio adjustment and rebalancing by targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.”He also noted that the current undervalued state of the market offers investors opportunities to position for the short, medium and long-term, urging them to target sound and dividend-paying stocks for capital appreciation.

The bulls maintained dominance at the Nigerian Stock Exchange (NSE) on Thursday, as more blue-chip stocks joined the league of gainers, resulting in a further rise in market capitalisation by N50 billion.

Precisely, the ASI rose 95.49 absolute points or 0.38 per cent to close at 25,236.97 points. Similarly, investors gained N50 billion as market capitalisation rose to N13.165 trillion.

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The upturn was impacted by gains recorded in medium and large capital stocks, including Nigerian Breweries, Unilever Nigeria, MTNN, Stanbic IBTC Holdings, and Flour Mills of Nigeria.

Analysts attributed the positive trend to renewed buying interests in high priced stocks, positive sentiment for rising crude oil prices at the international market, and hope for interim dividend.

For instance, analysts at Afrinvest Limited expect the market to close on a slightly bullish note for the week.Market sentiment, as measured by market breadth, closed negative as 15 stocks gained, relative to 18 losers. AXA Mansard Insurance recorded the highest price gain of 9.66 per cent to close at N1.59 per share.

Consolidated Hallmark Insurance followed with 8.82 per cent to close at 37 kobo, while Unilever Nigeria advanced 8.33 per cent to close at N13.00, per share.

Analysts at Codros Capital said: “Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”

The Chief Operating Office, Investdata Consulting Limited, Ambrose Omordion said: “Despite the rebound, we expect a mixed performance on profit taking and buying interest as corporate earnings and economic data are expected in the market, especially from the big banks, as well as inflation report for July.

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“The mixed intraday movement is likely to persist in the midst of profit booking and investors repositioning their portfolios ahead of Q3 numbers and last quarter of the year.”

Further analysis of last week’s trading showed that total turnover of 1.327 billion shares worth N13.934 billion was recorded in 19,392 deals by investors on the floor of the Exchange.

This figure exchanged was however in contrast to a total of 1.065 billion shares valued at N10.798 billion that changed hands in 20,482 deals in the preceding week.

The financial services industry (measured by volume) led the activity chart with 886.545 million shares at N8.360 billion traded in 10,161 deals; thus contributing 66.79 per cent to the total equity turnover volume and value, respectively.

The conglomerates industry followed with 155.956 million shares worth N187.728 million in 828 deals.

The third place was the consumer goods industry, with a turnover of 141.099 million shares worth N2.229 billion in 3,403 deals.

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Trading in top three equities namely, Guaranty Trust Bank Plc, Transnational Corporation of Nigeria Plc and Zenith Bank Plc. (measured by volume) accounted for 419.455 million shares worth N6.079 billion in 3,854 deals, contributing 31.60 per cent to the total equity turnover volume.

A total of 25,904 ETPs units valued at N169.443 million were traded this week in 17 deals, compared with 118,062 units at N1.061 billion transacted last week in 26 deals.

A total of 2,542 units bonds at N3.412 million were traded this week in seven deals compared with a total of 56,530 units worth N58.664 million transacted last week in 15 deals.

Tw equities appreciated in price during the week, lower than 41 in the previous week. About 33 equities depreciated, higher than 18 a week earlier, while 101 equities remained unchanged, lower than 104 equities during the period.

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