Despite global uncertainties, investors who invested in stocks on the Nigerian Exchange Limited (NGX) have gained 27.64 per cent Year-till-Date (YtD) on their investment, THISDAY analysis of market activity has revealed.
This is coming on the backdrop of federal government foreign exchange reforms and impressive corporate earnings by some listed firms.
Analysts believe the performance is a testament to the Nigerian market’s steadfastness amidst global uncertainties as foreign and local investors renewed interest in banking stocks, among other listed sectors.
Meanwhile, the local bourse witnessed a subdued performance last week as investors’ interest in MTN Nigeria Communications (MTNN) and some Tier-1 Banking stocks ensured the market closed positively.
Specifically, the NGX All-share index gained 0.20 per cent Wee-on-Week (WoW) gain to close at 65,325.37 basis points from 65,198.08 basis points it opened for trading.
In terms of sectoral performance, the NGX Banking and Insurance indices emerged as the gainers, recording a 1.26 per cent and 0.73 per cent week-on-week increase respectively.
Conversely, the NGX Consumer Goods, Industrial Goods, and Oil & Gas indices exhibited weakness, declining by 0.92 per cent, 0.39 per cent and 0.32 per cent respectively. This downward trend was influenced by cautious investor sentiment and sell-offs in select mid and high cap stocks. Investors are prudently assessing the intersection of prevailing market and economic conditions on these sectors.
The market breadth for the week was negative as 41 equities appreciated in price, 44 equities depreciated in price, while 70 equities remained unchanged. Guinea Insurance led the gainers table by 50.00 per cent to close at 39 kobo, per share. The Initiates Plc (TIP) followed with a gain of 30.56 per cent to close at 94 kobo, while Chellarams went up by 29.79 per cent to close to N4.40, per share.
On the other side, John Holt led the decliners table by 18.37 per cent to close at N1.20, per share. Dangote Sugar Refinery followed with a loss of 12.00 per cent to close at N33.00, while RT Briscoe declined by 10.42 per cent to close at 43 kobo, per share.
Overall, a total turnover of 1.741 billion shares worth N25.087 billion in 30,652 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 2.575 billion shares valued at N29.615 billion that exchanged hands previous week in 37,713 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.244 billion shares valued at N12.616 billion traded in 13,398 deals; contributing 71.43 per cent and 50.29 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 133.034 million shares worth N575.673 million in 1,572 deals, while the ICT Industry traded a turnover of 87.649 million shares worth N2.292 billion in 2,404 deals.
Trading in the top three equities; Sterling Financial Holdings Company, FBN Holdings and Universal Insurance (measured by volume) accounted for 518.847 million shares worth N3.917 billion in 1,901 deals, contributing 29.80 per cent and 15.61 per cent to the total equity turnover volume and value respectively.
However, analysts believe the recent seesaw movement on the stock market as revealed by the up and down trends in sentiments may continue this week.
Market participants maintained a cautious ‘wait-and-see’ approach; eagerly anticipating new catalysts to stimulate renewed buying interest, including the upcoming July inflation data release.
Market sentiment is poised for a shift as optimism surrounds the anticipation of favorable news that could potentially trigger another wave of buying interest.
Noteworthy is the decline in rates within the Treasury Bills’ primary market offers, a reduction to five per cent, 5.9 per cent and 9.8 per cent for the 91-day, 182-day, and 364-day instruments, respectively. This trend signifies ongoing portfolio rebalancing and sector rotation, bolstered by robust company earnings.
Looking ahead to the new week, analysts at Cowry Assets Management Limited said, “we anticipate a mix of sentiments fuelled by bargain hunting, amidst the backdrop of anticipated positive developments.
“Investors will be closely monitoring corporate earnings, especially among first-tier banks, as they navigate the landscape in the context of the forthcoming July inflation data release. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals.”
Cordros Securities Limited said, “we expect market performance to remain mixed in the week ahead as investors rebalance their portfolios based on an assessment of corporate earnings released thus far for H1, 2023.
“Nevertheless, we expect earnings from the Tier-1 banks in the coming week(s) to spur positive market sentiments, especially given the anticipation of interim dividends. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”