Interim Dividend Stocks May Spur Mixed Sentiments, Bargain Hunting

Analysts on the Nigeria equities market said this week projected mixed sentiments to continue on bargain hunting and expectation of more banking results.

Market metrics has turned green as it was witnessed in some days last week on impressive corporate earnings, enhanced by the audited half-year financials presented by some Companies like Zenith Bank and Stanbic IBTC Holdings, which beat analysts’ expectations.

Directors of both companies proposed 30 kobo and N1.50 interim dividends respectively, triggering ‘buy’ interests in financial stocks, supporting the positive sentiments and NGX index.

Analysts Optimism

The chief operating office of InvestData Consulting Limited, Mr Ambrose Omordion said: “we expect a mixed sentiments to continue on bargain hunting and expectation of more banking results, amidst oscillating sentiments that had continued on portfolio reshuffling and sector rotation on bargain hunting as players interpret July inflation of 19.64 per cent and impressive half-year results in expectation of more company’s scorecards, especially from the first-tier banks in the midst of sovereign risks, as all eyes are on interim dividends.

“We note also the flow of funds into the fixed income segment on the rate hike by the Central Bank of Nigeria (CBN), as sector rotation persists. Analysts are also focused on the lookout for Q2 GDP and flow of funds amid oil prices oscillation. Also, the market continues to interpret the rising inflation in relation to the crude oil price and other factors, in the midst of profit-taking and portfolio rebalancing. This will result in market players targeting fundamentally sound and dividend-paying stocks in the hope of dividend announcements.”

Going into the new week, Cowry Assets Management Limited, said earnings releases expectations from the banking heavyweights is expected to buoy trading activities as investors continue their bargain hunting activities in the market.

He said: “thus, we expect the market to trade in like manner as this week. However, we continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook.”

Also, this week, Afrinvest Limited expected bargain hunting activities to drive marginal gains

While GTI Securities Limited said: “the domestic equity market closed last week on a positive note; driven by investors’ bargain hunting on some bell-whether stocks. We expect mixed reactions to continue in the coming week.”

Last Week’s Trading Activities

After two consecutive weeks of lacklustre performance, the equities market was upbeat as the benchmark Index activities inched upward driven by persistent bargain hunting activities in some of the fundamentally attractive stocks in reaction to the upbeat performance of Nigeria’s economic output.

As a result, the NGX All-Share Index rose 0.63 per cent week-on-week (W-o-W) to close at 49,682.15 points. Similarly, market capitalisation increased by N168 billion to close at N26.797 trillion.

Meanwhile, performance was bearish across sectors as the Industrial Goods and Oil & Gas indices declined by 4.19 per cent and 4.08 per cent W-o-W respectively. Also, the Consumer Goods and Banking indices dipped 1.73 per cent and 0.06 per cent W-o-W respectively. On the flip side, NGX Insurance index recorded a growth of 3.88 per cent for the week.

The market breadth for the week was negative as 27 equities appreciated in price, 38 equities depreciated in price, while 91 equities remained unchanged. NEM Insurance led the gainers table by 30.81 per cent to close at N5.00, per share. Mutual Benefits Assurance followed with a gain of 20.00 per cent to close at 30 kobo, while Japaul Gold and Ventures went up by 17.24 per cent to close to 34 kobo, per share.

On the other side, Northern Nigerian Flour Mills (NNFM) led the decliners table by 12.79 per cent to close at N7.50, per share. FTN Cocoa Processors followed with a loss of 12.12 per cent to close at 29 kobo, while Ellah Lakes declined by 10.00 per cent to close at N3.60, per share.

Overall, a total turnover of 914.443 million shares worth N15.263 billion in 18,021 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 823.005 million shares valued at N12.228 billion that exchanged hands previous week in 17,482 deals.

The Financial Services Industry (measured by volume) led the activity chart with 723.125 million shares valued at N5.209 billion traded in 9,122 deals; contributing 79.08 per cent and 34.13 per cent to the total equity turnover volume and value respectively. The Consumer Goods followed with 51.097 million shares worth N4.668 billion in 2,610 deals, while the Conglomerates Industry traded a turnover of 36.089 million shares worth N72.383 million in 527 deals.

Trading in the top equities; Mutual Benefits Assurance, FBN Holdings (FBNH) and Access Holdings accounted for 325.818 million shares worth N1.758 billion in 1,897 deals, contributing 35.63 per cent and 11.52 per cent to the total equity turnover volume and value respectively.