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Yuletide sell-off continues, deepens volatility

By Helen Oji
27 December 2021   |   2:05 am
The general lull in the equities market, following preparations for the yuletide, resulted in a highly-volatile session last week.

[FILES] Nigerian Exchange Group (NGX). Photo/facebook/ngxgroup

The general lull in the equities market, following preparations for the yuletide, resulted in a highly-volatile session last week.

Although positive sentiments trailed large-cap consumer goods, banking, insurance and industrial goods, massive sell-offs of MTN Nigeria, FBN Holdings, Access Bank and Zenith Bank stocks eroded the gains, causing the market capitalisation and index to close flat.

Consequently, the Nigerian Exchange Limited (NGX) all-share index (ASI) and market capitalisation depreciated by 0.2 per cent to close the week at 42,262.85 and N22.060 trillion respectively.

Similarly, all other indices finished lower except main board, banking, insurance, NGX AFR Div Yield, MERI growth, consumer goods and industrial goods index, which appreciated by 0.44 per cent, 0.10 per cent, 1.85 per cent, 0.15 per cent, 0.56 per cent, 0.78 per cent and 0.43 per cent respectively while the ASeM, NGX growth and sovereign bond indices closed flat.

Analysts have predicted sustained volatility, with marginal gains, amid profit-taking and repositioning. According to them, investors were offloading their holdings to attend to some basic needs, which resulted in a decline in both market indicators.

They urged investors to focus on the upcoming full-year earnings season, to target companies with strong potential and grow their dividend on the strength of their earning capacity.

Specifically, Vetiva Dealings and Brokerage said: “Despite the session closing in the green, WTD return and market breadth still closed negative, as sentiment in the market continues to trend towards the bears.

“Therefore, we anticipate mixed sessions to close out the year, as we expect the market to be majorly driven by portfolio rebalancing activities.”

Afrinvest said: “In the last trading week of the year, we expect the market to extend this week’s negative performance as investors rebalance their portfolio.”

Cordros Capital said: “As the year draws to a close, we expect yield-seeking investors to take positions in stocks with attractive dividend yields ahead of the 2021FY dividend declarations.

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

Last week, a turnover of 965.061 million shares worth N12.5 billion was recorded in 14,802 deals by investors on the floor of the exchange, lower than 1.317 billion units valued at N15.3 billion that was exchanged in 18,292 deals on December 17, 2021.

The financial services industry (measured by volume) led the activity chart with 574.223 million shares valued at N4.9 billion traded in 7,794 deals; thus contributing 59.50 per cent to the total equity turnover volume.

The conglomerate industry followed with 246.783 million shares worth N 2.1 billion in 382 deals. The consumer goods industry ranked third, with a turnover of 30.307 million shares worth N1.669 billion in 2,157 deals.

“Trading in the top three equities namely UACN Plc, FBN Holdings Plc, and Sovereign Trust Insurance Plc (measured by volume) accounted for 378,555 million shares worth N3.266 billion in 14,802 deals, contributing 39.23 per cent to the total equity turnover volume and value respectively.

A total of 48,161 units of Exchange Traded Products (ETFs) valued at N587, 154.04 were traded this week in 15 deals compared with a total of 20 units valued at N231.30 transacted last week in two deals.

Also, 12,047 units valued at N11.512 million were traded this week in 12 deals compared with a total of 15,560 units valued at N15.985 million transacted last week in 11 deals.

On the price movement chart, 33 equities appreciated during the week, higher than 32 equities in the previous week.

25 equities depreciated, lower than 28 equities in the previous week, while 99 equities remained unchanged higher than 96 equities recorded in the previous week.