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Weak sentiments, unstable outlook, others depress equities further by 1.32%

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Amid continued weak, unstable economic outlook and absence of positive market catalysts, the bears dominated the equities market last week, resulting in four trading days of losses.

Consequently, the NSE All-share index and market capitalisation depreciated by 1.32 per cent, and 1.30 per cent, to close the week at 27,388.62 and N14.268trillion respectively.

All other indices finished lower with the exception of the NSE Industrial Goods index, which appreciated by 1.02 per cent, while NSE ASeM Index closed flat.

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A breakdown of the performance last week showed that the market reopened the week on a bearish note, occasioned by as sell-pressure in most high-value stocks, resulting to a further drop in market capitalisation by N96billion.

Subsequently, the All-Share Index fell by 184.93 points or 0.67 per cent to 27,570.94 points. Accordingly, investors lost N96billion in value as market capitalisation declined to N14.360trillion.

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The downturn was impacted by losses recorded in medium and large value stocks, amongst which were; Guaranty Trust Bank, BUA Cement, International Breweries, Ecobank Transnational Incorporated (ETI), and Dangote Sugar Refinery.

At the close of transactions on Tuesday, the equities market closed on a downturn, extending the negative streak, amid sell pressure on the banking and consumer goods sector, as index plummets further by 0.08 per cent.

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Index decreased by 23.38 absolute points, representing a dip of 0.08 per cent to close at 27,547.56 points. Similarly, the overall market capitalisation size shed N13billion to close at N14.347trillion.

The decline was occasioned by losses recorded in medium and large capitalised stocks, amongst which were; Guaranty Trust Bank, United Bank for Africa (UBA), FBN Holdings, Vitafoam Nigeria, and Zenith Bank.

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The reign of the bears continued unabated on Wednesday, even as more blue-chip stocks joined the league of losers, resulting in a further decline in market capitalisation by N9billion.

Precisely, the All-Share Index decreased by 24.48 absolute points, representing a dip of 0.09 per cent to close at 27,523.08 points. Similarly, the market capitalisation lost N9billion to close at N14.338trillion.

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Equities recorded the first gain of the week on Thursday, following buying interest in most bluechip stocks, as the All-Share Index (ASI) rose by 0.17 per cent.

Consequently, the All Share Index rose by 45.83 points or 0.17 per cent to 27,568.91 points.

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Accordingly, investors gained N24billion in value as market capitalisation went up to N14.362trillion.

The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; BUA Cement, CI Leasing, United Capital, Africa prudential and Ikeja Hotel.

Analysts and operators linked the high selling pressure during the week to prevailing weak investors’ sentiments, high inflation and unstable economic outlook for 2020, while expressing optimism of market rebound with the release of the 2019 full-year earnings.

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Therefore, they urged investors to take a position in stocks with good fundamentals.

Specifically, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, said: “The changing wave and thinking in the nation’s financial market also call for a change in investment strategies and portfolio rebalancing, at a time many investible funds are lying idle at a time of rising inflation.

He continued: “It is long established that under this circumstance, investors can only hedge by investing in dividend-paying stocks, especially now that earnings season has commenced.

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“Market recovery will continue when the 2019 full-year audited results release season fully takes off.

“Before now, we noted that, despite the correction, a good number of listed equities did not follow the NSEASI movement pattern and trend as accumulation continues in stocks with high dividend expectations.

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“We, therefore, advise investors to take advantage of low-priced equities as an intelligent investment strategy. Such equities should be selected after establishing the possibility of receiving cash dividends when the result is out.”
Analysts at Codros Securities Limited said: “Amidst continued weak market sentiments, we advise investors to trade cautiously, taking positions in fundamentally justified stocks.”

Further analysis of last week’s trading indicated that a turnover of 1.499 billion shares worth N17.907billion was recorded in 18,515 deals by investors on the floor of the Exchange.

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This amount traded was, however higher than a total of 912.175 million units valued at N12.126billion that changed hands in 17,083 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 1.226 billion shares valued at N12.974billion traded in 11,741 deals; thus contributing 81.79 per cent to the total equity turnover volume

The consumer goods sector followed with 83.882 million shares worth N3.090billion in 1,937 deals.

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The conglomerates industry ranked third with a turnover of 49.719 million shares worth N104.199million in 517 deals.

Trading in the top three equities namely, Zenith Bank Plc, Sovereign Trust Insurance Plc, and Guaranty Trust Bank Plc (measured by volume) accounted for 636.624 million shares worth N10.123billion in 4,539 deals, contributing 42.47 per cent to the total equity turnover volume.

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Similarly, 1,040 units valued at N3.606million were traded in 12 deals, compared with a total of 1,540 units valued at N137,421.20 transacted during the preceding week in five deals.

Furthermore, 40,469 units of Federal Government bonds valued at N47.681million were also traded last week in 25 deals, compared with a total of 23,923 units valued at N28.986million transacted last week in 22 deals.

About 24 equities appreciated at price during the week, higher than 19 equities in the previous week, while 28 depreciated; lower than 35 equities in the previous week and 111 equities remained unchanged, higher than the 109 recorded in the preceding week.

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