SAT 26 FEB, 2022-theGBJournal- Positive sentiments returned to the local bourse this week as investors took advantage of the moderation in share prices last week to make re-entries into companies with attractive dividend yields.
A total turnover of 1.668 billion shares worth N19.481 billion in 25,979 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 1.713 billion shares valued at N30.764 billion that exchanged hands last week in 24,767 deals, according to NGX Exchange data.
The NGX All-Share Index rose by 0.4% w/w to close at 47,328.42 points. Notably, bargain hunting in SEPLAT (+7.5%), GTCO (+2.7%), INTBREW (+4.8%), and MTNN (+0.8%) drove the weekly gain. Accordingly, the MTD and YTD return settled at +1.5% and +10.8%, respectively.
Trading in the top three equities namely Transnational Corporation of Nigeria Plc, United Capital Plc and Zenith Bank Plc (measured by volume) accounted for 491.673 million shares worth N5.411 billion in 4,277 deals, contributing 29.48% and 27.78% to the total equity turnover volume and value respectively.
However, activity levels were weaker than in the prior week, as trading volumes and value declined by 3.2% w/w and 37.0% w/w, respectively. Performance across sectors was broadly positive in line with the directional movement in NGXASI, as the Oil and Gas (+3.9%), Insurance (+0.7%), and Banking (+0.2%) indices posted gains. The Consumer Goods (-1.1%) index closed lower while the Industrial Goods index closed flat.
In the weeks ahead, we expect the NGX floor to be flooded with corporate earnings as more companies publish their audited 2021FY numbers, accompanied by dividend declarations. As things stand, we believe investors have fully priced-in dividend expectations.
Hence, we think positive surprises from dividend-paying stocks would provide a catalyst for increased buying activities. Notwithstanding, we advise investors to seek trading opportunities in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.
Meanwhile, global stocks came under intense selling pressures this week as investors were spooked by the escalation of the tensions between Russia and Ukraine after Putin ordered troops to move into two breakout regions (Donetsk and Luhansk) of Ukraine. However, investors’ worries eased late in the week following the West’s decision not to exclude Russia from the SWIFT interbank payments system. Consequently, US (DJIA: -2.5%: S&P 500: -1.4%) stocks were set to end the week in red as investors fled to safety following stern warnings from US officials over the ongoing geopolitical tensions between Russia and Ukraine.
In Europe, the STOXX Europe (-4.7%) and FTSE 100 (-4.1%) suffered huge losses as investors liquidated investment in stocks and rotated into safe-havens. In Asia, the Nikkei 225 (-2.4%) and the SSE (-1.1%) mirrored the downbeat mood in the global market as investors’ sentiments were dampened by Putin’s decision to invade Ukraine.
Emerging (MSCI EM: -6.2%) stocks posted losses consequent to the sell-offs in India (-3.4%) and China (-1.1%). Similarly, Frontier (MSCI FM: -5.4%) market stocks declined, following weakness in Kenya (-5.6%) and Morocco (-5.5%).
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