SAT 25 SEPT, 2021-theGBJournal- The local bourse managed to eke out a weekly gain despite profit-taking activities, as the All-Share Index ended the week 0.1% higher at 38,962.28 points.
Overall, A total turnover of 1.290 billion shares worth N13.921 billion in 16,745 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 856.289 million shares valued at N10.752 billion that exchanged hands last week in 15,663 deals, according to NGX Exchange data.
Trading in the top three equities namely FBN Holdings Plc, United Bank For Africa Plc and Guaranty Trust Holding Company Plc (measured by volume) accounted for 626.958 million shares worth N5.766 billion in 2,526 deals, contributing 48.58% and 41.42% to the total equity turnover volume and value respectively.
The Financial Services Industry (measured by volume) led the activity chart with 978.172 million shares valued at N8.300 billion traded in 8,716 deals, thus contributing 75.80% and 59.62% to the total equity turnover volume and value respectively.
The Consumer Goods Industry followed with 62.006 million shares worth N1.187 billion in 2,546 deals. The third place was Conglomerates Industry, with a turnover of 49.055 million shares worth N126.288 million in 589 deals.
Twenty-eight equities appreciated in price during the week, higher than Twenty-one equities in the previous week. Twenty-three equities depreciated in price, lower than Thirtyeight equities in the previous week, while one hundred and four equities remained unchanged higher than ninety- six equities recorded in the previous week.
Gains in OKOMUOIL (+5.6%), following renewed investors’ interest, managed to offset the declines in ZENITHBANK (-1.3%) and GTCO (-0.9%) this week. Activity levels were stronger as volume and value traded surged by 49.5% w/w and 28.2% w/w, respectively.
Consequently, the MTD and YTD losses moderated to -0.7% and -3.2%, respectively. Performances across sectors were mixed, with the Insurance (+1.7%) and Oil and Gas (+1.4%) indices recording gains while the Banking (-0.4%) index declined. The Consumer Goods and Industrial Goods indices closed flat.
We expect savvy investors to take advantage of the moderation in the share prices of bellwether stocks to make a re-entry in the week ahead. However, we expect intermittent profit-taking activities to persist as investors search for clues on the direction of yields in the FI market.
Accordingly, we think the market will exhibit a choppy pattern. Overall, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.
Meanwhile, According to the August Domestic & Foreign Portfolio Investment report of the Nigerian Exchange Limited (NGX), total transaction value at the domestic equities market declined by 0.4% m/m to NGN89.42 billion in August (July: NGN89.77 billion), representing a new record low since April 2017 (NGN54.90 billion).
The decline was primarily due to a 13.7% m/m decrease in domestic transactions (71.6% of total transactions), reflecting the limited participation from the domestic retail (-15.2% m/m) and institutional (-12.1% m/m) investors.
Foreign transactions (NGN25.36 billion vs July: NGN15.53 billion) increased on a month-on-month basis – we attribute this to the knock-on impact of IMF’s SDR allocation and the recently concluded Eurobond issuance on FPIs appetite for stocks.
Our expectation of yield moderation in the fixed income market bodes well for the equities market over the short to medium term.
Similarly, we expect improved participation from FPIs on account of increased dollar liquidity at the I & E window given inflows from IMF’s SDR allocation and the Eurobond issuance. Accordingly, we see scope for improved activities from both the domestic and foreign investors over the medium term.
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