Capital market analysts have predicted a mixed performance for equities this week, as the market enters June, the last month of 2022 first half.
They noted that market players will continue to digest the macro-economic data, among other developments to support an uptrend in the new month amid the rebound in oil prices sentiments in the coming week.
Meanwhile, with the Monetary Policy Committee (MPC) decision to increase the Monetary Policy Rate (MPR) to 13.0 per cent at its recently concluded meeting, the first rate hike since July 2016, analysts believe this was triggered by a knee-jerk reaction from investors, given that rising fixed income (FI) yields typically make equities less attractive.
According to them, 2022 being a pre-election year further suggests that investors would minimise exposure to risk assets. Nonetheless, we do not envisage a prolonged bearish run in the market, given the strong corporate earnings delivered by companies in the Q1, 2022 earnings season. As such, we think a short-term market correction will present opportunities for investors to make re-entry into stocks with sound fundamentals and attractive dividend yields.
Analysts Optimism
In the new week, analysts at Cowry Assets Management Limited expect to see a mixed reaction to the daily change of the local bourse, saying, “this we believe will be as a result of no upcoming company’s financial release for the new week.
“However, investors are advised to trade on companies’ stocks with good fundamentals and positive outlook so as to avoid falling into the bear trap.”
Cordros Capital Limited said: “With the recent decision of the MPC to hike the MPR by 150bps, we expect negative sentiments to dominate market performance in the short term. Nonetheless, we think a short-term market correction will present opportunities for investors to make re-entry in stocks with sound fundamentals and attractive dividend yields. Overall, we advise investors to take positions in only fundamentally justified stocks as the fragility of the macroeconomic environment remains a significant headwind for corporate earnings.”
Afrinvest Limited pointed out that, “this week, we anticipate mild gains in the market supported by bargain hunting.
Last Week’s Trading Activities
The local bourse closed in the green territory last week despite profit-taking activities in heavyweights in the telecommunications and consumer goods sectors.
The All-Share Index advanced by 2.09 per cent week-on-week (W-o-W) to close at 54,085.30 points. Similarly, market capitalisation gained N596 billion W-o-W to close at N29.158 trillion.
Notably, the positive performance this week was buoyed by foreign investors’ renewed interest in Airtel Africa which proved sufficient in offsetting losses in Guinness Nigeria, Nigerian Breweries and MTN Nigeria Communications (MTNN).
Performance across sectors was broadly negative. The NGX Insurance index, NGX Oil and Gas index, NGX Consumer Goods index, NGX Banking index, and NGX Industrial index decreased by 6.27 per cent, 0.86 per cent, 3.94 per cent, 0.76 per cent, and 0.67 per cent respectively to close at 180.28 points, 551.49 points, 664.23 points, 427.47 points, and 2,278.71 points respectively.
The market breadth for the week was negative as 23 equities appreciated in price, 54 equities depreciated in price, while 79 equities remained unchanged. Industrial & Medical Gases Nigeria led the gainers table by 20.88 per cent to close at N11.00, per share. MRS Oil Nigeria followed with a gain of 20.59 per cent to close at N16.40, while Airtel Africa went up by 20.20 per cent to close to N1,767.00, per share.
On the other side, UAC of Nigeria (UACN) led the decliners table by 27.08 per cent to close at N10.50, per share. Global Spectrum Energy Services followed with a loss of 18.77 per cent to close at N2.77, while Royal Exchange declined by 14.04 per cent to close at 98 kobo, per share.
Overall, a total turnover of 1.840 billion shares worth N27.286 billion in 27,273 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 3.021 billion shares valued at N31.784 billion that exchanged hands previous week in 29,153 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.286 billion shares valued at N10.745 billion traded in 12,379 deals; contributing 69.90 per cent and 39.37 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 251.105 million shares worth 1.659 billion in 1,371 deals, while the Consumer Goods Industry traded a turnover of 105.601 million shares worth N2.522 billion in 4,263 deals.
Trading in the top three equities; Ecobank Transnational Incorporation (ETI), Jaiz Bank and Access Holdings (measured by volume) accounted for 640.650 million shares worth N4.825 billion in 2,098 deals, contributing 34.81 per cent and 17.68 per cent to the total equity turnover volume and value respectively.
