Uncertainties, inconsistent government policies have continued to dampen investors’ confidence in the equity sector of the Nigerian Stock Exchange (NSE), raising questions as to turning around its fortunes.
This is just as economic recovery is also threatened by the COVID-19 crisis. Specifically, at the close of trading last week, the NSE All-Share Index and market capitalisation both fell by 0.08 per cent to close the week at 24,287.66 and N12.670 trillion, respectively.
Also, all other indices finished lower with the exception of NSE Lotus II and NSE Industrial Goods Indices, which gained 0.94 per cent and 0.52 per cent, respectively, while NSE ASeM closed flat.
Analysts argued that the sectorial rotation and performance have been volatile in the recent period, causing the market outlook to remain unstable.
The Chief Research Officer, Investdata Consulting Limited, Ambrose Omordion, decried that the half-year earnings performance, the discovery of a COVID-19 vaccine, oil price recovery, and effective implementation of government’s intervention policies, and 2020 revised budget failed to give the market the much-desired direction.
He, however, advised investors to diversify their portfolio into sectors that have strong upside potential, noting that the persistent fall in market activity and the continued negative trend call for cautious trading.
“Focusing on diversifying your long trades in sectors that have strong upside potential, especially looking at the telecoms and healthcare sectors, which have shown the most strength, therefore, is key at this point.
“The market’s high dividend yield continues to attract buying interests, as few audited and unaudited corporate earnings will hit the market, going forward.
“This is despite the likely continuation of selloffs. For immediate liquidity or cash we advise that you trade low priced stocks with serious caution to avoid being trapped,” he said.
Codros Capital said: “In our opinion, 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.”
Analysis of last week’s transactions showed that the market resumed trading for the week on a bearish note following sell-offs in most high-capital stocks, as investors’ wealth plunged by N56 billion.
Precisely, the All-Share Index (ASI) decreased by 105.76 absolute points, or 0.44 per cent fall to close at 24,200.60 points on Monday.
Similarly, the overall market capitalisation shed N56 billion to close at N12.624 trillion.
The downturn was impacted by losses recorded in medium and large value stocks, including Mobil Nigeria, MTN Nigeria Communications (MTNN), Zenith Bank, Guaranty Trust Bank and Eterna Oil.
The NSE sustained the bearish hold at the end of Tuesday’s transactions, occasioned by price depreciation in most banking stocks, causing the ASI to retreat further by 0.36 per cent.
The downturn was impacted by losses recorded in large and medium value stocks, including; Guaranty Trust Bank, Zenith Bank, GlaxoSmithKline Consumer Nigeria, Access Bank, and Africa Prudential.
Following bargain-hunting in some blue-chips, especially Airtel Africa, and Sunu Assurance, the domestic equities market closed positive for the first time in the week on Wednesday, as the All-Share Index rose 0.06 per cent.
At the close of transactions, the ASI increased by 15.67 absolute points or 0.06 per cent growth to close at 24,130.26 points.
Similarly, the overall market capitalisation gained N8 billion, an increase of 0.07 per cent to close at N12.588 trillion as a result of the listing of Tranzact International Plc Rights Issue of 4.67 billion Ordinary Shares of 50 Kobo each at N1.50 per share on the basis of 10 new ordinary shares for every nine ordinary shares.
The upturn was impacted by gains recorded in large and medium value stocks, including Airtel Africa, Dangote Sugar Refinery, Guaranty Trust Bank, Cutix Plc, and Access Bank.
Sustained bargain-hunting in most high-value stocks, especially MTN Nigeria, and Airtel lifted the NSE market capitalisation further by N104 billion on Thursday.
In summary, the All-Share Index (ASI) rose by 199.80 absolute points or 0.83 per cent to close at 24,330.06 points. Also, investors gained N104 billion as market capitalisation advanced to N12.692 trillion.
The upturn was impacted by gains recorded in large and medium capital stocks, including Airtel Africa, Presco, MTNN, Guaranty Trust Bank, and Cadbury Nigeria.
Further analysis of last week’s transactions showed that a turnover of 1.016 billion shares worth N7.436 billion was recorded in 18,092 deals by investors on the floor of the Exchange, in contrast to a total of 901.542 million units valued at N13.453 billion that was exchanged in 18,676 deals during the preceding week
The financial services industry (measured by volume) led the activity chart with 784.322 million shares valued at N3.305 billion traded in 10,592 deals; thus contributing 77.23 per cent to the total equity turnover volume.
The oil and gas industry followed with 61.822 million shares worth N418.191 million in 984 deals.
The third place was the consumer goods industry, with a turnover of 42.999 million shares worth N1.102 billion in 2,848 deals.
Trading in top three equities namely, Sterling Bank Plc, FCMB Holdings Plc, and FBN Holdings Plc. (measured by volume) accounted for 416.989 million shares worth N791.078 million in 2,752 deals, contributing 41.06 per cent, and 10.64 per cent to the total equity turnover.
Furthermore, a total of 106,450 ETFs units valued at N117.642 million were traded this week in 4 deals, compared with a total of 301,094 units valued at N2.384 billion transacted last week in 14 deals.
A total of 2,408 units of bonds valued at N2.614 million were traded this week in nine deals compared with a total of 11,487 units valued at N14.769 million transacted last week in 13 deals.
About 26 equities appreciated at price during the week, higher than 25 in the previous week. Also, 36 equities depreciated in price, higher than 33 equities in the previous week, while 101 equities remained unchanged, lower than 105 equities recorded in the previous week.