Nigerian equities market indicators have continued to decline despite impressive interim dividend declared by Guaranty Trust Bank, Zenith Bank and Stanbic IBTC Groups.
An interim dividend is a distribution to shareholders that has been both declared and paid before a company determined its full-year earnings. Such dividends are frequently distributed to the holders of a company’s common stock on either a quarterly or semi-annual basis.
In the financial results for the half year ended June 30, 2018, Guaranty Trust Bank and Zenith Bank declared an interim dividend of 30 kobo each while Stanbic IBTC posted an interim dividend of N1.00 per share.
Looking at the performance within July 31 to August 17, 2018 showed that the share price of Guaranty Trust Bank declined by 0.65 per cent to close at N22.88 per share. Guaranty Trust Bank shed 5.12 per cent to close at N38 from N40.05, while Stanbic IBTC Holdings gained 0.60 per cent to N50.05 from N49.75 per share. Meanwhile, the Month-to-Date and Year-to-Date losses of the Nigerian Stock Exchange (NSE) All-Share Index (ASI) as at August 17, 2018 increased to 4.73 per cent and 7.78 per cent, respectively.
Contrarily to the belief of analysts that the market may witness improved activities in the second half (H2) of the year as a result of interim dividends expected to be declared by companies, the market has continued to react to the sociopolitical environment fueling fears and uncertainties over next year’s general elections.
The political uncertainties in the country is further slowing down the economy, just as the expected impact of the faithful implementation of the year’s budget has not in any way reflected on the economy.
The dwindling investor confidence and low liquidity in the market is evident in the recent lukewarm reaction to interim dividends declared by directors of Zenith and Guaranty Trust Bank recently.
Speaking to LEADERSHIP on market performance, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said, “we expect the downtrend to continue as political risk escalates after second quarter earnings reporting season closed on a mixed performance ahead of second quarter GDP report that will hit the market any moment as the whole world watch Nigerian politicians toiling with the future of this great nation.”
Omordion urged investors to continue to interpret the recent second quarter earnings reports so as to rebalance their portfolios and watch the political space and analyse at the actual coming numbers released so far as a basis for determining the market and economy’s direction going forward.
He added that most important, is the outcome of the shadow elections by political parties taking place in the month of August, saying that investors should review their positions in line with investment goals, strength of the company numbers and act as events unfold in the global and domestic environment.
“However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were second quarter interim dividend payment are expected in the market arena very soon”, he said.
“We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamental,” he said.