Analysts stated that Nigerian equities are expected to sustain positive sentiments given the renewed attractiveness of the financial sector.
With the changing yield environment as revealed by the recent treasury bill (TB) primary market auction rates and yield suffered a further decline across all tenors to 5.5 per cent, 7.3 per cent and 9.89 per cent for the 91, 182 and 364-day periods respectively. This may likely trigger return of funds into the equity space, and may be fueling the ongoing uptrend and recovery, especially for high dividend paying companies with strong earnings.
The buying sentiment became stronger among some high, medium and low cap stocks that had posted positive earnings which supported the value that is attracting buy interest in the equity space by discerning investors and technical traders, especially as the primary trend of recovery remains intact ahead of year-end expectations.
NGX index sustained its strong momentum due to the prevailing high dividend yields in the stock market and shorter time frame to achieve similar returns with possibility of capital gains. With the ongoing Santa Claus rally and expected year-end window dressing by fund managers, and listed companies who desire to close the year higher.
Analysts Optimism
Going into the new week, Cowry Assets Management Limited expected the current trend of bullish trend to persist as investors continue on profit booking and portfolio rebalancing ahead of the year-end seasonality amid election uncertainty, saying “however, we continue to advise investors to trade on companies’ stocks with sound fundamentals.”
Analysts at Cordros Securities Limited noted that, “in the short term, we still see scope for expansion in valuation multiples, as positioning by early birds in dividend-paying stocks ahead of 2022 full year dividend declarations should outweigh profit-taking activities.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”
Afrinvest Limited stated that, “this week, we anticipate a modest sell-off as investors begin to re-align portfolios ahead of the new year.”
Last Week’s Trading Activities
For another week, the domestic bourse maintained its bull transition driven by strong buying interest and price appreciation in the large-mid cap stocks and portfolio reshuffling by investors seeking alpha ahead of the year-end seasonalities as players digest the recent macroeconomic data ahead of the earning season.
As a result, the benchmark index closed northward by 0.89 per cent week on week (W-o-W) to close at 49,316.29 points. Similarly, the market capitalisation for the week increased by N237 billion to close at N26.861 trillion.
Across the sectorial front, the performance was largely bullish in the week and was spearheaded by the Industrial Goods sector for another week, emerging as the leading advancer by 3.44 per cent. NGX Banking followed with a weekly gain of 2.87 per cent, NGX Insurance rose by 0.47 per cent, while NGX Oil/Gas Index increased by 0.36 per cent. On the flip side, the NGX Consumer Goods sectors closed the week with a decline of 0.2 per cent.
The market breadth for the week was positive as 32 equities appreciated in price, 28 equities depreciated in price, while 97 equities remained unchanged. Learn Africa led the gainers table by 28.48 per cent to close at N2.12, per share. Thomas Wyatt Nigeria followed with a gain of 18.75 per cent to close at 57 kobo, while Cornerstone Insurance went up by 13.04 per cent to close to 52 kobo, per share.
On the other side, McNichols led the decliners table by 11.48 per cent to close at 54 kobo, per share. Academy Press followed with a loss of 9.70 per cent to close at N1.21, while Prestige Assurance declined by 8.70 per cent to close at 42 kobo, per share.
Overall, a total turnover of 814.089 million shares worth N12.204 billion in 15,488 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.225 billion shares valued at N15.243 billion that exchanged hands last week in 15,317 deals.
The Financial Services Industry (measured by volume) led the activity chart with 663.799 million shares valued at N5.517 billion traded in 7,240 deals; contributing 81.54 per cent and 45.21 per cent to the total equity turnover volume and value respectively. The ICT Industry followed with 44.358 million shares worth N4.493 billion in 1,136 deals, while the Consumer Goods Industry trade a turnover of 27.372 million shares worth N1.187 billion in 3,051 deals.
Trading in the top three equities namely Sterling Bank, Access Holdings and Guaranty Trust Holding Company (measured by volume) accounted for 394.878 million shares worth N2.847 billion in 2,274 deals, contributing 48.51 per cent and 23.33 per cent to the total equity turnover volume and value respectively.
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