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Pressure on equities defy earning season, index slumps by 2.69 per cent

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Despite improved numbers in 2019 full year result churned out by quoted companies, sentiments remained weak in the equities market, causing the All-Share Index (ASI) to shed 2.69 percent. Specifically, the index and market capitalisation depreciated by 2.69 percent and 1.61 percent to close the week at 28,067.09 points and N14.618 trillion respectively.

All other indices finished lower with the exception of NSE Insurance index, which appreciated by 0.23 percent while NSE ASeM Index closed flat. Analysts said there would be sustained reversal amid the heightening insecurity witnessed in the country, in addition to the emergence of Coronavirus, which has continued to threaten the Chinese economy

Specifically, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, said: “We expect the seeming reversal to be sustained, despite the likely continuation of the mixed intraday movement in the midst of profit-taking, with investors buying ahead of dividend news and declaration.

“This is also against the backdrop that capital wave in the financial market may persist in the midst of the unstable economic outlook for 2020.”Also, investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.

“We see investors focusing on the upcoming of the full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity,” he added.

Codros capital said: “Your view, the trend witnessed this week is likely to persist, as the dual impacts of the weakening sentiment and mixed earnings performances during earnings season are expected to pressure market returns. Nonetheless, we advise investors to take positions in fundamentally justified stocks.”Further breakdown of last week’s trading showed that a total turnover of 1.478 billion shares worth N20.295 billion was recorded in 23,263 deals on the floor of the exchange, in contrast to a total of 1.561 billion units valued N26.073 billion that changed hands in 21,444 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 1.199 billion shares valued at N13.728 billion traded in 15,183 deals; thus contributing 81.14 to total equity turnover volume. The Consumer Goods followed with 68.225 million shares worth N2.444 billion in 2,312 deals. The third place was conglomerates industry, with a turnover of 60.095 million shares worth N242.213 million in 922 deals.

Trading in the top three equities, namely, Zenith Bank Plc, FBN Holdings Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 621.150 million shares worth N11.275 billion in 6,718 deals, contributing 42.03 per cent to the total equity turnover volume and value respectively.

A total of 55,246 units of Federal Government Bonds valued at N63.094 million were traded this week in 15 deals, compared with a total of 24,014 units valued at N26.120 million transacted last week in 12 deals. Also, 15 equities appreciated in price during the week, lower than 17 equities in the previous week and 49 equities depreciated in price, higher than 44 equities in the previous week, while 99 equities remained unchanged, lower than 102 equities recorded in the preceding week.


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