Market gains 1.11% as investors reposition for H1 earnings

Sentiments remained upbeat on the Nigerian Exchange Limited (NGX) for the second consecutive week, as investors continued to position on stocks with attractive dividend yields ahead of Half Year (H1), 2021 dividend declarations.

Consequently, the NGX All-Share Index (ASI) and market capitalisation appreciated by 1.11 per cent to close the week at 39,156.28 and N20.409 trillion respectively.

Similarly, all other indices finished higher except NSE Insurance, NSE ASeM and NSE Sovereign Bond which depreciated by 4.12 per cent, two per cent and 1.45 per cent respectively, while the NSE Growth Index closed flat.

Last week’s trading in the shares of Zenith Bank Plc, Sterling Bank Plc and Fidelity Bank
Plc (measured by volume) accounted for 261.344 million shares worth N2.712 billion in 2,862 deals, contributing 24.7 per cent to the total equity turnover.

A turnover of 1.058 billion shares worth N12.831 billion was recorded in 17,854 deals by investors on the floor of the exchange, in contrast to a total of 1.082 billion units valued at N9.548 billion that was exchanged in 17,933 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 714.677 million shares valued at N5.951 billion traded in 9,718 deals; thus contributing 67.53 per cent to the total equity turnover.

The consumer goods industry followed with 97.181 million shares worth N3.297 billion in 3,006 deals. The third place was ICT Industry, with a turnover of 75.987 million shares worth N583.715 million in 679 deals.

Analysts at Codros capital said: “In the week ahead, we expect investors to continue cherry-picking stocks ahead of the H1-2021 dividend declarations.

“With the recent development in the FI market, we are approaching an inflection point; we see scope for increased buying interest from risk-averse investors.

“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”

Investdata Consulting Limited said the banking sector and others remain attractive on the back of the prevailing low prices, despite the first quarter mixed numbers.

“Again, the way to go is to target dividend-paying stocks with growth prospects in 2021, looking at the way of mispriced equities ahead of the interim dividend announcement.

“This is especially given that despite the seeming improvements, fixed income yield continues to offer a negative real rate of return due to the galloping inflation.”

A total of 1,026 units of exchange-traded products valued at N160,140.75 were traded this week in eight deals compared with a total of 706 units valued at N5.127 million transacted in six deals during the preceding week.

A look at the market performance last week showed that sell-off in most blue-chip stocks, especially in that of Guaranty Trust Bank and Unilever, forced transactions on the NGX to reopen on a downward note on Monday as the ASI depreciated by 0.1 per cent.

Specifically, at the close of transactions, the ASI dropped by 39.7 absolute points, representing a decline of 0.1 per cent to close at 38,686.4 points while market capitalisation declined by N21 billion to close at N20.164 trillion.

The market loss was driven by price depreciation in large and medium capitalised stocks amongst which are Guaranty Trust Bank, Unilever Nigeria, Lafarge Africa, Union Bank of Nigeria (UBN) and FCMG Group.

Gains by many blue-chip stocks, especially Okomuoil and Learn Africa, aided NGX to reverse losses to close in an upbeat Tuesday, causing market capitalisation to increase by N102 billion.

Specifically, at the close of the transaction on Tuesday the market capitalisation of listed equities increased by 0.5 per cent to N20.266 trillion from N20.164 trillion reported the previous