By Taofik Salako, Deputy Group Business Editor
Nigerian equities rode on the back of global optimism and domestic bargain-hunting to close weekend with net capital gain of N390 billion, regaining the upswing after profit-taking transactions ended eight weeks of consecutive price appreciation.
Benchmark indices for the Nigerian equities market at the weekend indicated average return of 2.19 per cent for the week, equivalent to net capital gain of N390 billion. The average performance of the Nigerian stocks was generally within the top level of global rally, as investors reacted positively to straightening political transition in the United States of America (USA) and improving hopes of COVID-19 vaccines.
Key global trackers showed a generally positive sentiment across the markets. In USA, Dow Jones Industrial Average (DJIA) rose by 2.1 per cent. United Kingdom’s FTSE 100 posted modest gain of 0.2 per cent. Japan’s Nikkei 225 recorded average gain of 4.4 per cent while China’s SSE Index appreciated by 0.7 per cent. The MSCI EM Index- which tracks emerging markets, indicated average return of 1.1 per cent while its twin indicator, MSCI FM Index- which tracks Nigeria and other frontier markets, rose by 1.2 per cent.
The All Share Index (ASI)- the common value-based index that tracks all share prices at the Nigerian Stock Exchange (NSE) closed weekend at 34,885.51 points as against the week’s opening index of 34,136.82 points. Aggregate market value of all quoted equities at the NSE also rose correspondingly from the week’s opening value of N17.838 trillion to close weekend at N18.228 trillion.
The rally nudged the average year-to-date return to 29.97 per cent, effectively putting equities as positive inflation-adjusted assets.
With 27 advancers to 43 decliners, sectoral price analysis still showed considerable underlying profit-taking across the sectors. The positive overall market position was driven largely by gains in the large-cap cement and industrial goods sector. The NSE Industrial Goods Index rose by 4.4 per cent. The NSE 30 Index- which tracks 30 largest companies, including major cement companies in the industrial goods sector, rose by 1.31 per cent. This partly reflected the decline suffered by the influential banking sector, which posted negative average return of -1.31 per cent. The NSE Consumer Goods Index also dropped by 0.50 per cent. Meanwhile, the NSE Oil and Gas Index appreciated by 0.64 per cent while the NSE Insurance Index rose by 0.28 per cent.
The momentum of activities however slowed down as total turnover dropped to 1.816 billion shares worth N25.791 billion in 31,665 deals last week as against a total of 11.400 billion shares valued at N35.892 billion traded in 39,265deals two weeks ago.
The traditionally most active financial services sector remained atop activity chart with 1.274 billion shares valued at N14.710 billion in 18,392 deals; representing 70.15 per cent and 57.04 per cent of the total equity turnover volume and value respectively. The conglomerates sector occupied a distant second with 217.170 million shares worth N231.809 million in 1,226 deals while the consumer goods sector placed third with a turnover of 113.760 million shares worth N2.598 billion in 4,568 deals.
The three most active stocks were Zenith Bank, Transnational Corporation of Nigeria and Access Bank, accounting for 649.529 million shares worth N8.104 billion in 6,395 deals, 35.76 per cent and 31.42 per cent of the total equity turnover volume and value respectively.
At the exchange traded products (ETPs) segment, a total of 471,624 units valued at N4.224 billion were traded in 88 deals compared with a total of 21,455 units valued at N174.674 million traded in 15 deals two weeks ago.
At the debt market, a total of 9,697 bond units valued at N12.173 million were traded in eight deals compared with a total of 11,014 bond units valued at N15.257 million traded in 15 deals penultimate week.
Pricing trend analysis showed that UPDC Real Estate Investment Trust recorded the highest gain, in percentage terms, of 32.53 per cent. Neimeth International Pharmaceuticals followed with a gain of 12.03 per cent while NCR (Nigeria) rose by 10 per cent. On the negative side, Japaul Oil & Maritime Services, which had to issue a clarification to exaggerated diversification plan, led the losers with a 11.11 per cent drop. Honeywell Flour Mill dropped by 10.83 per cent while Custodian Investment declined by 10 per cent.
Most analysts expected Nigerian equities to remain largely on the upside considering the low rates at the fixed-income market, foreign exchange entrapment, corporate earnings and attractive valuation.
Analysts at Cordros Securities noted that with the recent decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to hold monetary policy parameters constant in furtherance of its growth objective, return-seeking investors will continue rotating their portfolio towards equities amid attractive dividend yields.
“We expect market performance to be dominated by the bulls, as positioning by early birds in dividend-paying stocks ahead of full year 2020 dividend declarations should outweigh profit-taking activities. We reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings,” Cordros Securities stated.
Analysts at Afrinvest Securities said this week might also see some profit-taking transactions, as investors might consider locking down recent capital gains.