Nigeria’s equities market is expected to remain positive this week as investors position in interim dividend-paying stocks.
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.
In the new week, analysts at Cowry Assets Management Limited expected the equities market to trade positively as investors position in stocks of companies, which are expected to pay interim dividends and which have good fundamentals. Also, we have seen the stop rates at the money market remain relatively flat; further moderation in that space may trigger buy sentiment in equities market.
Cordros Capital Limited said: “this week, we expect investors to continue cherry-picking stocks ahead of the H1, 2021 dividend declarations. With the recent development in the fixed income (FI) market, we are approaching an inflexion point; we, therefore, see scope for increased buying interest from risk-averse investors. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”
Analysts at Afrinvest Limited said: “in the coming week, we expect to see profit-taking in early trades. However, we believe this will be short-lived before the end of the week on account of bargain hunting by investors.”
The chief operating officer of InvestData Consulting Limited, Ambrose Omordion said: the profit-taking may slow down on buying momentum and sustained positioning in good fundamental stocks.
According to Omordion, the high buying pressure and inflow of funds into the equity space shows institutional investors or smart money are taking position ahead of economic data and half year earnings reporting season that are around the corner. This, he stressed, suggest that, discerning investors and traders should look the way of sectors and companies with high consumption and demand, capable of impacting positively on company numbers, while hedging against the nation’s galloping inflation.
He also urged investors to target dividend-paying stocks and fundamentally sound companies with growth prospects in 2021, looking the way of mispriced equities ahead of interim dividend announcement, saying that this is especially given that despite the seeming improvements, fixed income yield continues to offer negative real rate of return due to the galloping inflation.
“However, the strong and faster recovery may continue, depending on market forces, going forward, as propelled by expected second quarter (Q2) earnings reports, until the next Monetary Policy Committee (MPC) meeting in July,” he said.
Last week, sentiment was broadly positive as bullish trading dominated the market. Notably, bargain hunting on blue- chip stocks such as SEPLAT Petroleum Development Company (SEPLAT), Dangote Cement and Zenith Bank buoyed market performance.
Resultant of this effect, the All-Share Index advanced week-on week (W-o-W) by 430.18 points or 1.11 per cent to close at 39,156.28 points. Similarly, market capitalisation rose N224 billion W-o-W to close at N20.409 trillion.
Sectoral performance across sub-sector gauges tracked was positive. The NSE Banking, NSE Consumer Goods, NSE Oil & Gas and the NSE Industrial indices rose by 0.89 per cent, 1.06 per cent, 1.37 per cent and 2.36 per cent to close at 358.61 points, 199.42 points, 310.95 points and 1,952.38 points respectively. On the flip side, the NSE Insurance index rose by 2.36 per cent to 1,952.38 points.
Market breadth for the week was slightly negative as 35 equities appreciated in price, 36 equities depreciated in price, while 89 equities remained unchanged. Cutix Plc led the gainers table by 23.56 per cent to close at N2.25, per share. Okomu Oil Palm followed with a gain of 20.73 per cent to close at N116.50, while Morison Industries went up by 9.73 per cent to close to N1.24, per share.
On the other side, CWG Plc led the decliners table by 26.14 per cent to close at N1.13, per share. FTN Cocoa Processors followed with a loss of 15.38 per cent to close at 33 kobo and NEM Insurance declined by 13.46 per cent to close at N1.80, per share.
Overall, a total turnover of 1.058 billion shares worth N12.831 billion in 17,854 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.082 billion shares valued at N9.548 billion that exchanged hands previous week in 17,933 deals.
The Financial Services Industry, measured by volume led the activity chart with 714.677 million shares valued at N5.951 billion traded in 9,718 deals; contributing 67.53 per cent and 46.38 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 97.181 million shares worth N3.297 billion in 3,006 deals, while ICT Industry pulled a turnover of 75.987 million shares worth N583.715 million in 679 deals.
Trading in the top three equities; Zenith Bank, Sterling Bank and Fidelity Bank, measured by volume accounted for 261.344 million shares worth N2.712 billion in 2,862 deals, contributing 24.70 per cent and 21.13 per cent to the total equity turnover volume and value respectively.
On Exchange Traded Products (ETPs) platform, a total of 1,026 units valued at N160,140.75 were traded last week in eight deals compared with a total of 706 units valued at N5.127 million transacted previous week in 6 deals, while on the Bonds market, a total of 5,335 units valued at N5.350 million were traded last week in 10 deals compared with a total of 91,560 units valued at N96.346 million transacted previous week in 30 deals.