Investors are expected to take positions in major banks and companies ahead of the release of half-year results and interim dividends of those with the tradition of paying dividends twice in a year.
An interim dividend is the distribution of earnings to shareholders before the end of the fiscal year. Such dividends are typically paid out monthly or quarterly and in smaller amounts than an annual dividend. On the Nigerian Exchange (NGX) Limited, an interim dividend is paid at the end of the half year.
This week, analysts at Cordros Securities believed investors will digest the flurry of earnings released last week to gauge the extent of improvement in company’s fundamentals given the tepid recovery in macroeconomic conditions.
“As a result, we expect portfolio rebalancing activities into cyclical stocks and positioning in dividend-paying stocks to shape market performance in the week ahead. With the MPC meeting out of the way, we believe developments in the macroeconomic landscape and corporate actions will shape the direction of the local bourse,” they said.
In the new week, analysts at Cowry Assets Management Limited expected the equities market to trade positive as investors position in stocks of companies that printed positive financial results in H1 2021 as well as those likely to give interim dividends.
Also, Afrinvest Limited expected bargain hunting activities to dominate on the back of relative price attractiveness of stocks and release of favourable H1,2021 earnings results.
The chief operating officer of Investdata Consulting Limited, Mr Ambrose Omordion said: “we expect a mixed trend as investors continue to study emerging numbers so far and development in the FX market, while more earnings reports hit the market. The improvement in volume suggests that smart money is taking advantage of the pullbacks and relatively low prices to reposition. It is noteworthy that oil price continues its oscillation in the international market, even as corporate actions and interim dividend possibilities are around the corner.
“We note also that some stocks are trading within their buy ranges to become more attractive at this point for income investors and traders, even as the market anticipates positive news, while oil price continues to oscillate above $69 per barrel to support global economic and stock market recovery across climates. We also expect the ongoing COVID-19 vaccination to support the global and domestic economic recovery that will enhance the market and give direction.”
He said: “the banking sector and others remain attractive on the back of the prevailing low prices, despite the Q1 mixed numbers. Again, the way to go is target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities ahead of interim dividend announcement. This is especially given that despite the seeming improvements, fixed income yield continues to offer a negative real rate of return due to the galloping inflation.”
Last week, sentiments turned bearish as profit-taking activities dominated market performance. Specifically, the local bourse recorded losses in three of the five trading sessions. Notably, profit taking in BUA Cement, Guaranty Trust Bank Holding Company (GTCO) and Zenith Bank drove the weekly loss.
Consequently, the All-Share Index (ASI) closed lower week-on-week (W-o-W) by 0.31 per cent to close at 38,547.08 points. Hence investors lost N63 billion as market capitalisation declined to N20.084 trillion.
Performance across sectors was mixed. The NSE Industrial, NSE Banking and the NSE Insurance indices decreased by 1.32 per cent, 0.95 per cent and 1.12 per cent respectively to close at 1,975.31 points, 381.35 points and 197.77 points respectively. On the positive side, the NSE Oil & Gas and the NSE Consumer Goods indexes increased by 3.84 per cent and 0.06 per cent to close at 376.95 points and 597.66 points respectively.
However, market breadth for the week was positive as 37 equities appreciated in price, 35 equities depreciated in price, while 84 equities remained unchanged. Oando led the gainers table by 23.17 per cent to close at N4.89, per share. BOC Gases followed with a gain of 19.48 per cent to close at N9.20, while FTN Cocoa Processors went up by 17.07 per cent to close to 48 kobo, per share.
On the other side, Linkage Assurance led the decliners table by 14.29 per cent to close at 60 kobo, per share. Regency Assurance followed with a loss of 12.50 per cent to close at 42 kobo and UPDC Plc declined by 11.11 per cent to close at N1.20, per share.
Overall, a total turnover of a total turnover of 1.374 billion shares worth N11.823 billion in 22,982 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 896.174 million shares valued at N5.235 billion that exchanged hands previous week in 11,714 deals.
The Financial Services Industry (measured by volume) led the activity chart with 715.394 million shares valued at N4.745 billion traded in 10,274 deals; thus contributing 52.06 per cent and 40.13 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 212.340 million shares worth N517.613 million in 1,060 deals, while Oil and Gas Industry traded a turnover of 153.440 million shares worth N1.597 billion in 3,076 deals.
Trading in the top three equities; Transnational Corporation Of Nigeria (Transcorp), Oando and Fidelity Bank (measured by volume) accounted for 378.863 million shares worth N995.477 million in 2,998 deals, contributing 27.57 per cent and 8.42 per cent to the total equity turnover volume and value respectively.
On Exchange Traded Products (ETPs) platform, a total of 12,242 units valued at N911,149.30 were traded last week in 17 deals compared with a total of 8,032 units valued at N1.864 million transacted prior week in 19 deals, on the Bond market, a total29,324 units valued at N30.799 million were traded last week in 12 deals compared with a total of 11,776 units valued at N12.167 million transacted previous week in 10 deals.