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Rising COVID-19 cases depress equities market, as index slides 1.00%

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Despite the further easing of lockdown across the country, negative sentiments dominated Nigeria’s equities market at the close of trading last week.

The development caused the NSE All-share index and market capitalisation to depreciate by 1.00 per cent and 0.90 per cent, to close the week at 25,016.30 and N13.050trillion, respectively.

Also, all other indices finished lower with the exception of NSE AFR Div Yield and NSE Consumer Goods, which appreciated by 1.20 per cent and 0.26 per cent, respectively, while NSE ASeM closed flat.

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Analysts linked the downturn to the rising COVID-19 crisis, currently ravaging the entire domestic and foreign economies. It is noteworthy that Nigeria has recorded about 12,233 cases with 342 deaths in the last four months.

Analysis of last week's transactions showed that the market resumed trading for the month of June, upbeat, following gains recorded by most bluechip stocks, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) increased by 0.19 per cent.

Specifically, at the close of transactions, the ASI increased by 48.33 absolute points, representing a growth of 0.19 per cent to close at 23,892.92 points. Also, the overall market capitalisation gained N26billion to close at N13.194trillion.

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The uptrend was impacted by gains recorded in large and medium value stocks, amongst which were; Dangote Sugar Refinery, Nigerian Breweries, Guaranty Trust Bank, Vitafoam Nigeria, and BUA Cement.

Analysts at Imperial Asset Managers Limited had envisaged “a measure of profit-taking, as some active traders may likely cash in on the profit,” while those at Afrinvest Research anticipated “a mixed performance.”

“Nonetheless, we reiterated that investors with long-term investment goal should continue to build their portfolios given the current attractive valuation of most fundamentally viable stocks,” they added.

Transactions on the equities sector continued on a positive note on Tuesday, as more bellwether stocks appreciated at price, resulting in a further rise in market capitalisation by N47billion.

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The All-Share Index increased by 67.28 absolute points or 0.27 per cent to close at 25,316.15 points. Similar, the overall market capitalisation gained N47billion to close at N13.241trillion.

The uptrend was impacted by gains recorded in large and medium capitalised stocks, amongst which were; Dangote Cement, Guaranty Trust Bank, MTN Nigeria Communications, NASCON Allied Industries, and Skyway Aviation Handling Company.

Similarly, equities trading sustained the bullish profile on Wednesday, as more bluechip stocks experienced price appreciation, causing the All-Share Index to surge further by 0.10 per cent and gained 24.53 points to close at 25,407.96 points.

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Consequently, investors’ wealth appreciated by N13billion, as market capitalisation closed at N13.254trillion.

The uptrend was impacted by gains recorded in large and medium value stocks, amongst which were; Presco, MTN Nigeria Communications, Stanbic IBTC Holdings, Ecobank Transnational Incorporated (ETI), and Skyway Aviation Handling Company.

However, following profit taking embarked upon by investors, the Nigerian equities market halted the gaining streak to close on a downturn on Thursday, as market capitalisation lost N50billion.

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Precisely, the ASI decreased by 95.91 absolute points, representing a dip of 0.38 per cent to close at 25,312.05 points. Similarly, the overall market capitalisation shed N50billion to close at N13.204trillion.

The downturn was impacted by losses recorded in medium and large value stocks, amongst which were; MTN Nigeria Communications (MTNN), Guaranty Trust Bank, Custodian Investment, Glaxo Smithkline Consumer Nigeria, and Access Bank.

Analysts at Codros Capital said: “Our opinion, 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 trade cautiously and seek trading opportunities in only fundamentally justified stocks.”

Analysts at InvestData Securities Limited, said: "We expect profit-taking to continue, as breakout or breakdown at this consolidation level will confirm next market direction despite profit-taking, as investors positioning reveals confidence among market players, implying that opportunities are still available before the Q2-driven earnings expectation.

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"Also, sectors that have suffered oversold, so far, offer attractive risk-reward buy-opportunities and outlook for consideration ahead of the Q2 economic and corporate data."

Further analysis of last week's transactions showed a turnover of 1.469 billion shares worth N23.553billion was recorded in 22,911 deals by investors on the floor of the Exchange, in contrast to a total of 1.255 billion shares valued at N13.501billion exchanged in 20,554 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 861.775 million shares valued at N8.545billion traded in 11,647 deals; thus contributing 58.66 per cent to the total equity turnover volume. The consumer goods industry followed with 184.644 million shares worth N5.880billion in 3,953 deals. The third place was the Services industry, with a turnover of 119.238 million shares worth N270.084million in 1,043 deals.

Trading in top three equities namely FBN Holdings Plc, Guaranty Trust Bank Plc, and Zenith
Bank Plc. (measured by volume) accounted for 456.576 million shares worth N6.940billion in
5,921 deals, contributing 31.08 per cent to the total equity turnover volume.

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