Stock market: analysts expect mixed performance

Capital market analysts predicted a mixed performance for the stock market this week.

Analysts at Afrinvest Limited in its weekly financial market report said that “Over the coming week we expect a mixed performance due to a prolonged bargain hunt and weak sentiment in the markets. investors “.

Additionally, analysts at Cordros Securities Limited said, “We expect the local stock market lull to persist until positive triggers in the form of lower fixed income yields ( FI) and improved dollar liquidity stimulate buying interest from domestic and foreign portfolio investment investors (REITs). .

“That said, we expect risk-averse investors to recalibrate their portfolios to fundamentally sound stocks with attractive dividend yields over the coming week. However, we advise investors to only take positions in actions that are fundamentally justified because the fragility of the macroeconomic environment remains a major obstacle for corporate profits. ”

In the new week, analysts at Cowry Assets Management Limited expected the equity market index to close in positive territory, with investors perceiving CBN’s preference for growth as positive for the equity market.

Following its 138th bimonthly Monetary Policy Committee (MPC) last week, the CBN kept all monetary policy parameters at current levels; MPR at 11.5%, asymmetric corridor at + 100 / -700 basis points, liquidity ratio (LR) at 30.0% and Cash Reserve Ratio (CRR) at 27.5%. The Committee noted that the performance of the global economy in the first two quarters of the year 2021 and in the third quarter remained favorable with a positive outlook for the remainder of the year.

The MPC’s result on equities, analysts noted that “despite the largely decent profits generated by companies during the first half of 2021 earnings season, it has not attracted much buying interest from the share. equity investors. Since the last MPC meeting in July, ASI has registered a meager 0.3% gain as of September 16, 2021.

“In our opinion, the outcome of the MPC meeting has already been costed. Therefore, we expect a neutral reaction from market participants. However, we still see an opportunity for the market to generate positive returns in Q4 2021, as returns will trend south; the positioning of investors in dividend-paying stocks ahead of dividend declarations for the year 2021 in the first quarter of 2022; and increased REIT activity supported by improved liquidity conditions in the FX Investors and Exporters window.

InvestData Consulting Limited COO Ambrose Omordion said technically the see-saw movement of the Nigerian Exchange Index (NGX) stock on low volume traded is a concern for technical traders. , as players digest the latest inflation data and Treasury Bills (TB) auction rates amid foreign currency illiquidity ahead of the MPC meeting outcome.

Omordion further explained that “Meanwhile, savvy investors and traders continue to take advantage of market downturns to reposition themselves, while many stocks remain undervalued and at the same time trade within their buy ranges, a situation which should attract funds to the equities space given the high dividend yields capable of serving as a hedge against inflation.

“In addition, institutional and other investors continue to digest second quarter GDP growth ahead of Tier 1 bank results, as well as further repositioning of portfolios for the last quarter of the year. In addition, investors are still observing the interplay of forces in the forex market as the CBN gives a guideline for the new digital currency platform.

“The low volume last week suggests that institutional investors and others are still watching the changing business environment with caution. It should be noted that oil prices have rebounded on the international market; corporate actions, along with the possibility of interim dividends, are just around the corner. “

The local stock index turned positive last week as yields in the bond space moderate further as the CBN halt the rate hike in the money market. The preference for real sector growth was further underscored by the just concluded MPC meeting. Hence the bullish momentum in the equity space.

Specifically, the NGX All-Share Index rose on a week-over-week (WoW) basis by 22.09 points or 0.06% to close at 38,943.87 points. Likewise, market capitalization increased by 11 billion naira to close at 20,290 billion naira.

Sector performance did not reflect the benchmark as most indices closed in red. The NSE Banking index, NSE Insurance, NSE Consumer Goods, NSE Oil & Gas and the NSE Industrial index fell 0.79%, 0.58%, 0.21%, 3.35% and 0.24% respectively to close at 370.21 points, 184.02 points. , 548.99 points, 358.99 points and 1,954.46 points respectively.

Meanwhile, a total turnover of 856.289 million shares worth 10.752 billion naira in 15,663 transactions was traded last week by investors on the exchange floor, compared to a total of 1.426 billion shares valued at 13.073 billion naira which traded hands in the previous week. in 19,315 transactions.

The financial services industry (measured by volume) dominated the activity chart with 583.038 million shares valued at 3.971 billion naira traded in 7,894 transactions; contributing 68.09 percent and 36.93 percent respectively to the volume and value of total stock sales. The consumer goods industry followed with 62.961 million shares valued at 3.197 billion naira in 2,579 transactions, while the ICT industry traded a turnover of 45.745 million shares in ‘worth 1.646 billion naira in 775 transactions.

Negotiate the three main actions; Access Bank, Universal Insurance and Wema Bank (measured by volume) accounted for 211.151 million shares worth 789.843 million naira in 1,403 transactions, contributing 24.66% and 7.35% respectively to volume and value of total stock turnover.

On the Exchange Traded Products (ETP) platform, a total of 106,810 units valued at 1.852 million naira were traded last week in 21 deals, compared to a total of 2,016 units valued at dwarf 537,038.08. traded in the previous week in 10 deals, while on the Bond market, a total of 51,261 units valued at N52.911 million were traded last week in 26 trades, against a total of 93,019 units valued at N99.809 million traded the previous week in 39 trades.

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