SAT 15 JAN, 2022-theGBJournal- Sentiments remained broadly bullish in the second trading week of the year as investors continued to cherry-pick stocks with attractive dividend yields ahead of 2021FY dividend declarations. Accordingly, the NGX All-Share Index rose by 1.4% w/w to close at 44,454.67 points.
All other indices finished higher with the exception of NGX CG, NGX insurance, NGX AFR bank Value, NGX Consumer Goods and NGX Lotus II Indices, which depreciated by 0.79%, 1.54%, 0.07%, 4.35%, and 1.34%, respectively while the NGX ASem, NGX Growth I and NGX Sovereign bond indices closed flat.
Over all, A total turnover of 1.600 billion shares worth N32.716 billion in 22,607 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 2.027 billion shares valued at N59.014 billion that exchanged hands last week in 15,750 deals, according NGX Exchange data.
Bargain hunting in BUAFOODS (+24.1%), DANGCEM (+8.0%), GUINNESS (+5.8%), and INTBREW (+5.1%) drove the weekly gain. Consequently, the YTD gain increased to 4.1%. Activity levels were weaker than in the prior week, as trading volume and value declined by 22.4% w/w and 44.8% w/w, respectively.
Trading in the top three equities namely Transnational Corporation of Nigeria Plc, BUA Foods Plc, Jaiz Bank Plc (measured by volume) accounted for 775.685 million shares worth N16.625 billion in 2,644 deals, contributing 48.49% and 50.82 % to the total equity turnover volume and value respectively.
Analysing by sectors, the Industrial Goods (+3.6%), Banking (+2.5%), and Oil and Gas (+1.7%) indices posted gains. On the flip side, the Consumer Goods (-4.4%) and Insurance (-1.5%) indices declined.
The Financial Service Industry (measured by volume) led the activity chart with 731.264 million shares valued at 6.517 billion traded in 10,822 deals; thus contributing 45.71% and 19.92% to the total equity turnover volume and value respectively. The Conglomerate Industry followed with 403.646 million shares worth N 452.909 million in 1,537 deals. The third place was The Consumer Goods Industry, with a turnover of 314.768 million shares worth N17.759 billion in 4,101 deals.
In the short term, we expect the bulls to retain dominance in the market given positioning for 2021FY dividends as institutional investors continue to search for clues on the direction of yields in the FI market. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.
Meanwhile, Global stocks extended losses to the second week as investors’ sentiments for risk assets waned, following a fresh round of hawkish comments from Federal Reserve policymakers which signalled an impending policy tightening and faster interest rate hikes by March 2022 to match rising inflation.
Accordingly, US. stocks (DJIA -0.3%; and S&P 500: -0.4%) faltered as expectations of higher interest rates following surging inflation and hawkish Fed stance drove selloffs in tech stocks. On the other hand, European equities (STOXX Europe: 0.0% and FTSE 100: +1.0%) swayed between gains and losses as investors weighed the course of monetary policy from the US Fed against positive growth data from the UK.
Elsewhere, Asian markets (Nikkei 225: -1.2%; and SSE: -1.6%) mirrored the bearish sentiments on Wall Street as tech heavyweights led losses amid concerns over the impact of the Omicron coronavirus variant. On the other hand, the Emerging market (MSCI EM: +3.0%) stocks were buoyed mainly by gains in India (+2.2%) and Brazil (+2.7%), while the Frontier market (MSCI FM: 0.0%) stocks closed flat.
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