The Nigerian equities market sustained its positive performance last week as the Nigerian Stock Exchange (NSE) All-Share Index rose by 2.04 per cent, the highest weekly gain since August 23, 2019.
The market had the previous week broken free from a five-week decline to gain 0.08 per cent. That growth was sustained last week as bargain hunters swooped on fundamentally strong stocks following shift to the equities market, after the Central Bank of Nigeria (CBN), barred local investors from participating in its open market operations (OMO) auctions.
Out of the four trading days for the week, the market appreciated in three days, making the NSE ASI to close at 26,851.68, while market capitalisation added N261.3 billion to close at N13.07 trillion.
The market opened for trading on Tuesday with a gain of 0.54 per cent but dipped by 0.37 per cent on Wednesday. However, the market recovered on Thursday with an appreciation of 1.84 per cent and 0.03 per cent on Thursday and Friday respectively. Consequently, it posted a weekly gain of 2.04 per cent.
In terms of sectoral performance, the NSE Banking Index led the with a growth of 6.8 per cent, followed by the NSE Industrial Goods Index, rising by 3.2 per cent. Similarly, the NSE Consumer Goods Index went up by 2.6 per cent. Conversely, the NSE Oil & Gas Index fell 1.8 per cent, while the NSE Insurance Index depreciated by 0.6 per cent.
Market analysts said the market would continue to witness some level of gains in the short-term. For instance, commenting on the market performance, analysts at Greenwich Trust Limited said: “Despite sell-offs witnessed in the banking space, the positive sentiment on counters in the Consumer, and Industrial goods sector pulled the market to a positive close. Although, we observe investors are locking in positions on fundamentally sound stocks, we do not rule out pockets of profit taking, this we expect would characterize trading activities in the coming week.”
In the view of analysts at Cordros Capital Limited said: “In our view, the performance this week is a reaction to a limited outlet for investments given recent policy directives limiting domestic participation in the market. We expect that the market might continue to benefit over the short-term especially in the face of lower yields in the fixed income market.”
On their part, analysts at Afrinvest West Africa Limited said: “We expect to see gains in fundamentally sound stocks as investors’ sentiment towards the equities market improves. Nonetheless, we maintain that this might be short-lived as economic buffers are still absent.”
Before now, some analysts had projected that the CBN directive on OMO auction would impact positively on the equities market.
Analyst with Lagos-based CardinalStone Partners Limited, Michael Nwakalor had said “There is real hope this could be good for equities. We should see a lot of corporate heavyweights gain in coming weeks as pension funds look for high-yielding investment.”
Also, Head of Investment Research at Sigma Pensions, Wale Okunrinboye had said: “While it is possible to see some asset re-allocation towards equity markets, for pension funds to start buying equities again, the economic policy environment has to show credibility around structural reforms to unlock economic growth.”
Apart from the CBN directive that is pushing some investors to the equities market, the bearish trend has depressed prices of stocks to very attractive levels. Based on the low prices of stocks, stakeholders had enjoined investors not to miss entry opportunity.
For example, Mr. Ambrose Omordion of Invest Data Limited, had said that discerning investors should latch onto the attractive valuation as a way of averaging down and recouping their investment immediately a recovery stage sets.
According to him, they expect the losing momentum to diminish, as the market reacts to seemingly impressive Q3 numbers released so far and in expectation of more quarterly earnings reports ahead of month-end portfolio alignments, especially as the NSE’s new lows offer investors opportunities to position for short and medium-to-long-term views.
He said: “Given that earnings and economic news can change trend at any time, keep your gaze on fundamentally sound and dividend-paying stocks for possible capital appreciation as Q3 numbers giving insight into companies’ position and future expectations.”
Also, the Chairman, Association of Securities Dealing Houses of Nigeria(ASHON), Chief Patrick Ezeagu, said investors should not miss the entry opportunity provided by the low valuations in the market.
He said that trend analysis of corporate earnings in recent times and the current nine months results indicate that many companies across sectors have posted higher earnings with good returns, noting that these results have not significantly reflected in the upward movement of their share prices.
“Very attractive valuations exist in the market right now. What investors need to do is to seek the full advice of securities dealers, the stockbrokers for sound professional advice, and each investor will receive peculiar advice based on the outcome of profiling and take advantage of low prices,” he said.
He explained that most people selling their shares right now are speculators and not real investors.
“Every stock market needs speculators for liquidity but they can change investment decision in one second. Our stock market is forward looking. Investors need not be nervous. They should consult professional stockbrokers for sound investment decision. There is no basis for panic sale of shares. Many companies have announced strong financial performance with prospects of increased future earnings,” he said.
On his part, Managing Director/CEO of Network Capital Limited, Mr. Oluropo Dada said the market, more than ever before, presented an overwhelming buy opportunity for all categories of investors in the face of the attractive valuations and CBN’s policy banning local corporates and individuals from investing in OMO auctions.
“The market fundamentals, despite the persistent illiquidity is still very strong and prices of quoted securities can only go up, which will be triggered by both arbitrage income and dividend income. Based on the third quarter results being released by the quoted companies, especially the banks, the market is where to be now,” Dada said.
The volume and value of trading was also high last week as investors transacting 2.084 billion shares worth N33.867 billion exchanged in 21,849 deals, compared with 2.063 billion shares valued at N18.431 billion that were traded in 16,778 deals the previous week.
The Financial Services industry led the activity chart with 1.705 billion shares valued at N21.555 billion traded in 15,395 deals, thus contributing 81.84 per cent and 63.65 per cent to the total equity turnover volume and value respectively. The Consumer Goods industry followed with 188.870 million shares worth N7.445 billion in 1,989 deals, while the third place was occupied by the Conglomerate industry with a turnover of 82.675 million shares worth N128.662 million in 691 deals.
Trading in the top three equities namely: Zenith Bank Plc, Access Bank Plc and United Bank for Africa Plc, accounted for 1.210 billion shares worth N17.048 billion in 7,031 deals.
Top price gainers and losers
Meanwhile, 39 equities appreciated in price during the week, higher than 30 equities in the previous week, while 11 equities depreciated in price, lower than 28 equities in the previous week.
Wema Bank Plc led the price gainers with 28.8 per cent, trailed by Cornerstone Insurance Plc with 26.5 per cent. Guinness Nigeria Plc garnered 22.7 per cent, while Jaiz Bank Plc chalked up 22.4 per cent.
Other price gainers included: FBN Holdings Plc (18.1 per cent); Dangote Sugar Refinery Plc (17.5 per cent); Unity Bank Plc (17.5 per cent); Cement Company of Northern Nigeria Plc (14.2 per cent); Access Bank Plc (14.1 per cent) and Chams Plc (12.5 per cent).
Conversely, Total Nigeria Plc led the price losers with 9.9 per cent, trailed by Learn Africa Plc with 9.4 per cent. Unilever Nigeria Plc shed 5.6 per cent, while Continental Reinsurance Plc went down by 5.0 per cent. PZ Cussons Nigeria Plc and Seplat Petroleum Development Company Plc depreciated by 3.6 per cent and 2.7 per cent in that order.
Other top price losers included: Ikeja Hotel Plc (2.0 per cent); Eterna Plc (1.7 per cent); Nigerian Aviation Handling Company Plc (1.2 per cent); and MTN Nigeria Communications Plc (0.82 per cent).