Investors on sideline ahead MPC meet despiteN1.2trn weekly gains

BY CHARLES ABUEDE

Nigerian equities extended the previous week’s positive performance as broad-based gains across key sectors pushed the NGX Index higher. Thus, the market gained 4.25 percent week on week, as investors remain bullish on the consumer goods and oil and gas sectors after they took N1.2 trillion in weekly gains. However, contrary to the expectations of equity analysts, continuous buying interest supported the bulls as the NGX All-Share Index appreciated further to close at 53,098.46 points and for that reason, the market year to date return rose to 24.3 percent from the previous 19.2 percent penultimate week while market capitalisation gained week on week to N28.6 trillion from N27.46 trillion.

Looking into this week in line with expectations of analysts at Vetiva Capital Research and Afrinvest Securities Research, who opined that “Given the sustained buy-side activity seen throughout the last week, coupled with the possibility of the CBN raising rates at this week’s MPC meeting, we anticipate a quiet start to the week, as investors remain on the sidelines in anticipation of the Monetary Policy decision before committing further to equities. However, we anticipate a bearish performance on the back of profit-taking this week.”

Moving further, the market activity level dropped as average volume and value traded fell 32.1 percent and 17.7 percent week on week respectively to 361.9 million units and N5.4 billion. Also, the top traded stocks by volume for the week were Transnational Corporation which recorded 208.9 million units, followed by Guaranty Trust Holding Company with 108.9 million units, and Zenith Bank with a total of 66.4 million units, while the likes of MTN Nigeria with N3.1 billion, Guaranty Trust Holding Company which recorded N2.6 billion, and Dangote Cement trading N1.8 billion through the week led the chart for the most traded securities by value.

Breezing across the sectorial front, the performance was bullish across sectors as five of six indicators advanced beginning with the ICT index which led the gainers’ chart, by gaining seven percent week on week on the back of buying interest in MTN Nigeria (+15.0%). Trailing behind, were the Oil & Gas and Consumer Goods indices which advanced by 6.9 percent and 5.4 percent week on week respectively on the back of bargain hunting on Ardova Plc (+10.1%), Seplat Plc (+8.3%), Champion Breweries (+30.8%), and International Breweries (+30.4%), due to expectation of an ease in food and core inflation.

As well, price appreciation in Lafarge Cement (+14.2%), Dangote Cement (+2.6%), Unity Bank (+12.5%), and Guaranty Trust Holding Company (+2.1%) drove the Industrial Goods and Banking indices higher by 2.3 percent and 0.04 percent week on week, respectively. On the other hand, the Insurance index extended losses, down 1.9 per cent week on week due to selling pressure on Coronation Insurance (-6.7%) and AIICO Insurance (- 6.2%).

Investor sentiment, as measured by market breadth, waned to 0.2x from 0.3x the previous week as 47 stocks gained, 32 lost while 72 were unchanged. The top outperforming stocks for the week were McNichols Consolidated (+59.5%), Royal Exchange Assurance (+51.5%), and Champion Breweries (+30.8%) while Academy Press (-13.7%), Ikeja Hotel (-10.9%), and Guinness Nigeria (-10.9%) were the top underperforming stocks for the week.

Meanwhile, the week closed with NGX 30 Index increasing by 5.72 percent week on week to close at 2,060.70 points as against 1,949.17 points at the previous close. Market turnover closed with a traded volume of 122.90 million units. Flour Mills and Seplat were the key gainers, while International Breweries and Stanbic IBTC were the key losers.