SAT 07 AUG, 2021-theGBJournal- In line with our expectations, positive sentiments returned to the local bourse this week as the gradual release of corporate earnings bolstered buying interests in dividend-paying stocks. Save for the penultimate trading day; the market recorded gains on all five trading sessions.
Consequently, the All-Share Index advanced by 0.7% w/w to close at 38,811.11 points. As a result, the MTD gain increased to +0.7%, while the YTD loss moderated to -3.6%. All other indices finished lower with the exception of NGX-Main Board, NGX Premium, NGX Lotus II and NGX Sovereign Bond indices which appreciated by 1.07%, 0.30%, 0.29 and 0.45% respectively, while the NGX Growth Index closed flat.
However, activity levels were weaker, as trading volumes and value declined by 30.1% w/w and 32.0% w/w, respectively. Notably, foreign investor’s interest in AIRTELAFRI (+5.7%) drove the weekly gain.
Sectoral performance was broadly negative following declines in the Insurance (-1.5%), Oil and Gas (-0.6%), Banking (-0.6%), Industrial Goods (-0.2%) and Consumer Goods (-0.5%) indices.
Overall, a total turnover of 989.593 million shares worth N8.183 billion in 19,617 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.374 billion shares valued at N11.823 billion that exchanged hands last week in 22,982 deals, according to NGX data.
The Financial Services Industry (measured by volume) led the activity chart with 603.656 million shares valued at N3.864 billion traded in 9,337 deals; thus contributing 61.00% and 47.22% to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 102.233 million shares worth N133.987 million in 846 deals. The third place was Consumer Goods Industry, with a turnover of 80.979 million shares worth N1.250 billion in 2,902 deals.
Trading in the top three equities namely Transnational Corporation Of Nigeria Plc, Sterling Bank Plc and FBN Holdings Plc (measured by volume) accounted for 210.187 million shares worth N554.388 million in 1,414 deals, contributing 21.24% and 6.77% to the total equity turnover volume and value respectively.
Twenty-three equities appreciated in price during the week, lower than Thirty-seven in the previous week. Thirty-six equities depreciated in price, higher than Thirty-five equities in the previous week, while ninety-seven equities remained unchanged higher than eighty-four equities recorded in the previous week.
Considering the positive performance in the local bourse this week, we believe earnings from the Big banks in the coming week will sustain the positive market sentiments. Particularly as the declaration of interim dividends will accompany the results. Overall, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.
Meanwhile, despite the growing spread of the COVID-19 Delta variant, global stocks were broadly bullish as investors took solace in impressive corporate earnings in U.S and Europe and expectations that global systemic important banks will likely push back the normalization of monetary policy.
Consequently, U.S. (DJIA: +0.4%; S&P: +0.8%) stocks gained marginally as investors sentiment was buoyed by strong corporate earnings and a decline in unemployment claims amidst the economic threat of the delta virus variant.
In Europe, the STOXX Europe (+1.6%) and FTSE 100 (+1.1%) were set for a weekly gain as stronger-than-expected quarterly results, and a flurry of merger activity among European companies boosted sentiments.
Likewise, Asian markets posted positive performances, with the Nikkei 225 (+2.0%) and SSE (+1.8%) set for a weekly gain as upbeat corporate earnings on Wall Street lifted sentiments. Emerging (MSCI EM: +1.7%) and Frontier (MSCI FM: +1.2%) markets stocks mirrored the bullish trend across global equities consequent on gains in China (+1.8%) and Vietnam (+2.4%), respectively.
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