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Weak economy, others trigger negative sentiments on NSE

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Nigeria’s weak economic situation exacerbated by the increasing number of COVID-19 cases, has continued to trigger negative sentiments on the equities market.

Specifically, at the close of trading last week on the Nigerian Stock Exchange (NSE), the All-Share index and market capitalisation fell by 0.99 per cent to close the week at 24,826.75, and N12.951 trillion respectively.

All other indices finished lower with the exception of NSE-Main Board, NSE MERI Growth, NSE Consumer Goods, NSE Lotus II and NSE Industrial Goods Indices, which appreciated by 1.00 per cent.

Analysts at the weekend, linked the negative sentiments to increasing number of COVID-19 cases in Nigeria and weak economic state of the country.

However, they expressed optimism of imminent rebound, noting that the current low prices of stocks may spur bargain-hunting this week.

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Precisely, analyst at Afrinvest said: “Our opinion is that 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. Although we are not optimistic of a rebound in market performance in the coming week due to poor investor sentiment, current stock prices are attractive for bargain hunting.”

A review of market performance last week showed that the NSE resumed trading on a downward note on Monday, occasioned by profit-taking in bellwether stocks, as investors wealth depreciated by N119 billion.

The All Share Index (ASI) shed 228.35 points or 0.91 per cent to 24,954.32 points. Accordingly, investors lost N119 billion in value as market capitalisation lost N13.018 trillion.

The downturn was impacted by losses recorded in medium and large value including MTN Nigeria Communications (MTNN), BUA Cement, Zenith Bank, Ecobank Transnational Incorporated (ETI), and Guaranty Trust Bank.

Capital market analysts attributed the decline to profit-taking in stocks that had gained in price, maintaining a bearish outlook during the week, as market fundamental remain susceptible to the negative effect of the COVID-19 pandemic and geo-political tensions.

The market sustained the sliding profile at the end of transactions on Tuesday, as more blue-chip stocks, especially Neimeth and Prestige Assurance depreciated in price, resulting to a further slide in market capitalisation by N13 billion.

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Specifically, ASI slipped by 23.44 absolute points (0.09 per cent) to close at 24,930.88 points, while overall market capitalisation shed N13 billion to close at N13.005 trillion.

The downturn was impacted by losses recorded in large and medium capitalised stocks, amongst which were; Flour Mills of Nigeria, MTN Nigeria Communications, Ardova Plc, C&I Leasing, and Neimeth International Pharmaceuticals.

Renewed bargain-hunting in most blue-chip stocks lifted transactions at the NSE on Wednesday, causing market capitalisation to advance by N22 billion.

At the close of trading, the ASI shed 42.01 absolute points or 0.17 per cent to close at 24,972.89 points. Similarly, the market capitalisation rose by N22 billion to close at N13.027 trillion.

The uptrend was impacted by gains recorded in large and medium capitalised stocks, among them, Nestle Nigeria, Flour Mills of Nigeria, Cadbury Nigeria, Access Bank, and Zenith Bank.

Following price losses suffered by most blue-chip stocks, the Nigerian equities market reversed the gaining streak to close on a downward note on Thursday, causing the ASI to shed 0.16 per cent.

The ASI fell by 39.48 absolute points to close at 24,933.41 points, while overall market capitalisation shed N20 billion to close at N13.007 trillion.

The downturn was impacted by losses recorded in medium and large value stocks, including, Nigerian Breweries, Fidson Healthcare, Neimeth International Pharmaceuticals, NPF Microfinance Bank, and Jaiz Bank.

Last week, a total turnover of 1.050 billion shares worth N10.125 billion was recorded in 19,576 deals by investors on the floor of the Exchange, in contrast to the 1.103 billion shares valued at N9.876 billion exchanged in 16,616 deals during the preceding week.

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The financial services industry (measured by volume) led the activity chart with 736.274 million shares at N5.472 billion traded in 9,776 deals; thus contributing 70.13 per cent to the total equity turnover.

The conglomerates industry followed with 69.496 million shares worth N334.478 million in 471 deals.

The third place was the consumer goods industry, with a turnover of 66.380 million shares worth N1.351 billion in 3,130 deals.

Trading in top three equities namely, Guaranty Trust Bank Plc, FBN Holdings Plc, and FCMB Group Plc. (measured by volume) accounted for 316.321 million shares worth N3.350 billion in 2,983 deals, contributing 30.13 per cent to the total equity volume.

A total of 121,769 units valued at N675.284 million were traded this week in 22 deals, compared with a total of 767,768 units valued at N5.607 billion transacted last week in 17 deals.

Also, 11,920 units at N12.265 million were traded last week in 18 deals compared with a total of 1,002 units worth N971,140.42 transacted in nine deals during the previous week.

About 14 equities appreciated in price during the week, lower than 34 last week, while 47 depreciated in price, higher than 31 in the previous week. Also, 102 equities remained unchanged, lower than 98 recorded a week earlier.

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